Downgrades for Mortgage-Backed Securities
Southern California mortgage companies still see the effects of the state’s long recession on home loans, especially on so-called “subprime” loans to borrowers who don’t qualify for conventional mortgages.
Duff & Phelps Credit Rating Co., blaming the earlier soured housing market, recently downgraded securities backed by mortgage pools put together by Long Beach Mortgage Co. in Orange and Quality Mortgage Co. in Irvine.
The downgrades, which reflect an increased concern about possible defaults, don’t affect Long Beach Mortgage, said its general counsel, Jon Daurio. The company, which specializes in subprime loans, is well regarded on Wall Street and has no problem selling its current batch of loans, he said. Quality Mortgage executives were unavailable for comment.
But the fact that the earlier loans eroded faster than anyone expected, including Duff & Phelps, means that investors holding those securities will get less for them in any sale.
James S. Granelli covers financial institutions and fraud issues for The Times. He can be reached at (714) 966-5810 and at james.granelli@latimes.com
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