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Morningstar Credit Ratings Publishes Alert About Effect Of Colorado Flooding On Non-Agency Residential Mortgage-Backed Securities

HORSHAM, Pa., Oct. 7, 2013 /PRNewswire/ -- In response to the Federal Emergency Management Agency's (FEMA) declaration of the flooding in Colorado as a major disaster, Morningstar Credit Ratings, LLC published its first edition of Alerts on Non-Agency Residential Mortgage-Backed Securities (RMBS). These Alerts are special reports that serve to explain the impact of certain market events that affect the non-agency RMBS market.

Federal aid is available for individual assistance in nine counties—Arapahoe, Clear Creek, El Paso, Jefferson, Logan, Adams, Boulder, Larimer, and Weld—and the latter four counties are also eligible for public assistance. According to the Morningstar RMBS Alert, approximately 50,000 homes securing 4,756 RMBS transactions are located in these counties. This equates to a $9 billion outstanding balance, or 1.08 percent of the entire non-agency RMBS universe. More than 75 percent of the affected houses were securitized between 2005 and 2007.

"Although the overall exposure of non-agency RMBS properties to this event is relatively small and insurance proceeds should be available to cover some of the losses, investors should be aware of the potential effect on individual securities, especially prime securities with less credit support. Morningstar's analysis shows that exposure to affected non-agency RMBS properties could be as high as 34 percent of current senior credit support," Brian Grow, managing director, Morningstar Credit Ratings, said.

The Morningstar RMBS Alert on the Colorado flood is available here.

About Morningstar Credit Ratings, LLC and Morningstar, Inc. Morningstar Credit Ratings, LLC is a Nationally Recognized Statistical Rating Organization (NRSRO) that specializes in structured credit research and ratings, including commercial mortgage-backed securities (CMBS). Morningstar Credit Ratings offers a wide array of services including new-issue ratings and analysis, operational risk assessments, surveillance services, data, and technology solutions.

Morningstar, Inc. offers an extensive line of products and services for individuals, financial advisors, and institutions. Morningstar provides data on approximately 433,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 10 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its registered investment advisor subsidiaries and has approximately $166 billion in assets under advisement and management as of June 30, 2013. The company has operations in 27 countries.

Morningstar, Inc. is not an NRSRO and its credit ratings on corporate and municipal issuers are not NRSRO credit ratings.

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