S&P Removes Mortgage-Bond Head, Asset-Backed Alert SaysMatt Robinson
Standard & Poor’s removed Sharif Mahdavian as head of U.S. residential mortgage-bond ratings and surveillance after the company withdrew a grade last month, industry newsletter Asset-Backed Alert reported.
Mahdavian is no longer rating new deals and is now handling housing research, according to the article. Waqas Shaikh, who’s been with the New York-based unit of McGraw Hill Financial Inc. since 1999, took over Mahdavian’s responsibilities about two weeks ago.
The change comes after S&P pulled preliminary ratings on bonds made up of once-delinquent mortgages from issuer Bayview Asset Management LLC last month. The world’s largest credit rater said it asked for more information from the issuer after releasing the planned grades as the deal started to be marketed.
“We believe the U.S. Residential Mortgage-Backed Securities sector is rapidly evolving with important developments still to come,” Ed Sweeney, a spokesman at S&P wrote in an e-mail. “By adding senior talent to our RMBS ratings practice, we are enhancing our analytic capabilities,” he wrote.
Fitch Ratings criticized the deal in a May 2 statement, saying its competitor underestimated the risk of the securities. Based on the property-price estimates of real estate brokers instead of the computer models S&P relied on, Fitch said the loans exceed current home values by more than 45 percent. That would increase projections for defaults by about 20 percent and the size of losses after foreclosures by 30 percent, Fitch said.
S&P shook up its leadership in 2011 after the rater withdrew its opinion on a commercial-mortgage backed deal. David Jacob, the former global head of structured finance at S&P, left the company after the rater pulled the grades on a deal in July of that year following the discovery of potential discrepancies in how its methodology was being applied. It later said the conflict wasn’t significant.