Falling home prices, rising defaults and evidence that mortgage fraud during the housing boom was more widespread than previously known has Standard & Poor's considering downgrading its ratings on $7.35 billion in securities backed by subprime loans. The news that the ratings agency had placed 612 classes of residential mortgage-backed securities on "CreditWatch negative" Tuesday sent Treasury rates up and the dollar down, and could increase the cost of financing a home for some borrowers with blemished credit. Many of the securities were backed by loans originated by bankrupt New Century Financial Corp. and Fremont General Corp., which had a subprime subsidiary that was shut down by federal regulators in March. Between 75 percent and 80 percent of the loans backing each of the 612 classes placed on CreditWatch negative are subject to "some type of payment adjustment" over the next 18 months. Standard and Poor's said the majority of the securities placed on CreditWatch negative T...
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