NEW YORK--(EON: Enhanced Online News)--Kroll Bond Rating Agency (KBRA) released commentary today regarding the treatment of extraordinary expenses in residential mortgage-backed securities (RMBS) transactions. Extraordinary expenses are payments owed to the master servicer, securities administrator, trustee or custodian as indemnification or reimbursement for any claim, loss, liability, cost or expense incurred in connection with a securitization. These extraordinary expenses are paid or reimbursed from the trust fund and are senior in priority to payments of principal and interest. Therefore, they can lead to potential credit risk and potential rating volatility depending on their treatment within the structure.
The commentary, titled Structural Treatment of Extraordinary Expenses, can be found at www.krollbondratings.com.