Subprime Laxity Hits CDOs

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Subprime Laxity Hits CDOs

Michael Hudson and Aparajita Saha-Bubna of the WSJ report that turmoil in the subprime-mortgage market fanned out yesterday, hitting a group of investments that are exposed to this struggling class of home loans.

Moody’s Investors Service said yesterday it may cut its credit ratings on slices of 91 collateralized-debt obligations, or about $5 billion of securities. It is a small percentage of the overall CDO market, but still an important development, because it is a signal that subprime fallout is rippling through financial markets to an important class of investments.

In another sign of these ripple effects, Fitch Ratings released a report yesterday raising cautionary flags about the commercial real-estate market. It projected rising defaults in this sector after years of increasingly lax lending standards, which could hit bonds backed by commercial real-estate loans.

To read the full article click here.

If you or someone you know lost money in a subprime mortgage or CDO investment, please contact the attorneys at The Frankowski Firm at 888-741-7503 to discuss your potential legal remedies.

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