U.S.

RMBS Roundtable: Originators, Aggregators, And Counsel Discuss New Qualified Mortgage Rules
Primary Credit Analyst: Jack E Kahan, New York (1) 212-438-8012; jack.kahan@standardandpoors.com

Table Of Contents
Panel Discussion

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

NOVEMBER 1, 2013 1
1210611 | 301674531

U.S. RMBS Roundtable: Originators, Aggregators, And Counsel Discuss New Qualified Mortgage Rules
Beginning in early 2014, residential mortgage originators must comply with a new set of rules under the Truth in Lending Act (TILA) that implement sections of the Dodd-Frank Act. Experts are debating these rules' potential impact on loan originations and the creation of residential mortgage-backed securities (RMBS). The ability-to-repay (ATR) rule, an amendment to Regulation Z of the TILA, requires that creditors make reasonable, good faith determinations of a consumer's ability to repay loans while establishing protections from liability for certain qualified mortgages (QMs). A loan that meets the criteria for being a QM will have certain liability protections, whereas those that don't won't have any presumption of compliance with the rule. Specifically, the rule requires that an originator consider and verify eight underwriting factors to make a determination of a borrower's ability to repay: Current income or assets. Current employment status (if employment income is being considered). Monthly P&I (fully indexed). Monthly P&I of any simultaneous second lien. Monthly payment of other mortgage-related obligations (T&I, condo assessments, etc.). Current debt obligations. Monthly DTI or residual income (no DTI limit). Credit history.

Although there are other options for obtaining QM status, the majority of loans that will be considered QM must meet certain criteria: Product Type Test. The loan must have a term of no more than 360 months. The loan also must be fully amortizing (no negative amortization, interest -only, or balloon loans). Underwriting Test (43% DTI or GSE). The loan must be underwritten to the same eight standards as listed for ATR, with some differences in calculating P&I payments, specific rules around which income and debts are acceptable, and a hard line DTI cut-off. The calculated DTI must be 43% or less. Instead of underwriting to those factors, a loan can meet the underwriting test simply by verifying eligibility for purchase by FNMA or FHLMC, insurance by HUD or RHS, or guarantee by VA or USD. A loan that uses this option must still meet the Product Type test and the Points and Fees test. Points and Fees Test. The points and fees for a loan should be no more than 3% for loan balances greater than or equal to $100,000. Loan balances below $100,000 use a sliding scale and can become as high as 8% of the loan balance. A non-QM loan is one that falls short of at least one of the eligibility criteria of a QM loan, and so it does not have any presumption of compliance with the rule and no additional protections from litigation. These loans may be acceptable under the rules, but they do not qualify for additional protection. QM loans are further bifurcated, by the level of protection provided, into QM-Safe Harbor and QM-Rebuttable Presumption. This bifurcation is solely a factor of the

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

NOVEMBER 1, 2013 2
1210611 | 301674531

U.S. RMBS Roundtable: Originators, Aggregators, And Counsel Discuss New Qualified Mortgage Rules

loan's APR relative to the average prime offer rate (APOR) at the time of origination. For first-lien QM loans, an APR that is less than 1.5% above APOR is considered to be Safe Harbor, whereas QM loans with an APR above that threshold will benefit from a rebuttable presumption of compliance with the ATR rule. Safe Harbor loans will be considered to automatically comply with the rule. A borrower who wishes to show that an originator did not verify the borrower's ability to repay will not be able to pursue any remedy if the originator can prove that the loan has met all three tests above. Rebuttable presumption loans, on the other hand, will be presumed to comply with the rule. This protection forces a borrower to prove that despite the loan meeting QM standards, the borrower's income, debts, and other payments known to the originator did not leave the borrower with sufficient residual income to meet the borrower's living expenses. Non-QM loans will have the benefit of neither protection, leaving the lender open to challenges to the ATR analysis used in qualifying the borrower. The ability-to-repay rule, ostensibly to prevent defaults and another housing crisis, is still very much open to interpretation. To that end, Standard & Poor's Ratings Services recently held a private roundtable with several market participants. The confidential discussion offered the attendees an opportunity to share their views and interpretations of these rules, offer opinions on how to operate efficiently within the scope of the rules, and highlight perceived conflicts the rules still present. In our view, the discussion identified some common themes, notably: Most originators will focus on QM-Safe Harbor loans to avoid liability and achieve the best execution. Many originators will also find attractive opportunities to originate non-QM loans. Non-agency originations of QM or non-QM loans will continue to focus on super-prime borrowers as lenders find that the best defense is to limit the potential for default. The documentation standards used by originators will be the key to compliance with the rule. The panelists discussed: Updated GSE origination disclosure templates tailored to rule requirements. Borrower affidavits confirming documentation. Potential audio or video recording of borrower interactions to mitigate oral evidence risks. Focus on borrower education and financial awareness. Assignee liability may only be a risk to securitization trusts for foreclosed loans as a defensive action and not as affirmative claims. Expectations for the number of borrower claims in default and the success of those claims may be slightly higher for non-QM loans than in the recent past but is still small for prudent originators.

Panel Discussion
Jack Kahan, a director in Standard & Poor's new issue RMBS group, moderated the roundtable. The other participants were representatives from mortgage originators, third-party due diligence firms, loan aggregators, and legal counsel for originators. What follows is a summary of the points discussed and some of the opinions proffered. The opinions expressed are the

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

NOVEMBER 1, 2013 3
1210611 | 301674531

U.S. RMBS Roundtable: Originators, Aggregators, And Counsel Discuss New Qualified Mortgage Rules

opinions of the individual participants and not necessarily of their employers or of Standard & Poor's. Standard & Poor's: What processes should a prudent originator follow to underwrite a loan under the new rule? What considerations should be given the additional obligations and liabilities under the rule? Originators/Aggregators: Originators felt that the rule creates a new paradigm in loan origination, as it creates a new set of loans that may violate law. The rule creates a nontrivial liability, and in general, originators cannot transfer a portion of the default risk liability. Originators and aggregators noted that enforcement of any new processes are a significant concern for them within their institutions and among the companies they deal with. This concern is particularly important for their correspondents, where they enter into arrangements with regional banks, for example, who will take applications and fund the loans. Originators and aggregators roundly agreed that the aggregate cost of the increased liability under the rule (which they believe will increase severity at the time of loan liquidation), will cause them to take a much more credit-intensive view of prime mortgages. While the rule doesn't bar subprime credits, the increased default risk increases the originators' expected liability. Originators and aggregators felt that they should focus a majority of efforts on loan underwriting documentation. Efficient documentation of credit decisions is paramount so that they'll avoid having to settle or lose a judgment if the borrower defaults and the originator is put in a position to defend their underwriting in court. Due-diligence firms: Due diligence firms agreed that the key focus of originators should be on documentation. They speculated that the better originators will be those that are the most proficient in their use of technology (using e-filing, for instance), making it possible for a due diligence firm to verify that all the borrower's documentation is clear. Regarding the determination of QM status for a loan, the diligence firms indicated that the hard line rules leave potential pitfalls. They felt that originators need to be cognizant of affiliate costs in determining points and fees, the evidence around discount points, and calculation methods and inputs for DTI, as these items could make or break QM protections. In compliance with the QM limit for a 43% DTI, the diligence firms anticipated originators keeping a cushion of 1-2 percentage points below the 43% threshold. Originators/Aggregators: Originators also pointed out that while the rule specifies a three-year retention period on materials, originators should retain records for the life of loan given that the rule does not provide a statute of limitations on the borrower's right to a defensive claim. While documentation is exceedingly important, originators must also focus on the reliable retention of that information, which can become costly. Standard & Poor's: Given that documentation of loan underwriting will be exceedingly important, what specific tools or strategies could originators use to ensure compliance with the rule and swift dismissal of borrower claims? How can one efficiently account for the use of oral evidence in defensive testimony? Originators/Aggregators: Originators first emphasized that market participants will look to the GSEs to update their lending forms, which will become more outdated at the onset of the rule. Panelists generally seemed to reach consensus that originators should use some type of borrower affidavit to bolster their underwriting. While the lender is relying on particular loan documentation during the process, the borrower is the only party who knows how much income they actually have. And even the borrower's own subjective assessment of their residual income requirements or expected future income may be subject to dispute by the borrower in a subsequent action. Unfortunately, in the case of the residual income, will originators be relying on what the borrower tells them with respect to living expenses? What if a borrower has an ongoing medical condition? The condition will obviously affect his ability to repay the loan, as medical bills will create a drag on income. At the same time, originators will not be able to inquire directly about the borrower's medical health without running afoul of "Fair Housing" rules.

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

NOVEMBER 1, 2013 4
1210611 | 301674531

U.S. RMBS Roundtable: Originators, Aggregators, And Counsel Discuss New Qualified Mortgage Rules

Finally, many originators and aggregators indicated that they would use some type of recording, either audio or audio/video, to rebut oral evidence that the borrower could introduce in a subsequent action. They indicated that recording phone calls or face-to-face conversations could be the best way to avoid making mistakes and to back up the borrower documentation prior to or at close. Other originators and legal counsel discussed the efficacy and practicality of recordings. If lost, they could create another liability down the road, as lost files did during the crisis. In addition, in the case of video recordings, certain visual cues--such as the borrower leafing through voluminous loan documentation during closing--might suggest that the borrower did not fully understand the loan documentation. Originators also might have privacy-related issues. For example, because many states require both parties to consent to any recording, the originators could be forced to deny loans where borrowers refuse such consent. Originators face a central challenge in sorting out the many subjective factors in the documentation and determining which methods are worth the time and costs to pursue. Originators must be cognizant of the trade-off between additional protections through increased documentation processes and the additional costs associated with implementing them. If an originator needs to spend $20,000 to make a $200,000 loan, the costs are not justified, or the points and fees would be too extreme. Due-diligence firms: Diligence firms echoed the need for documentation standardization and looked to rating agencies to determine what documentation diligence firms should review. They raised concern over recordings. Although they would capture a significant amount of originator and borrower interaction, a borrower could assert or request information that might have been captured on an audio file as a back-door to discovery during litigation, and so the recording could increase liability. From their perspective, if pre-closing call recordings are to be used, it will be imperative to have the right script and ask the right questions. Recordings may very well document and shield the originator, giving them the ability to prove what the borrower told them in case the borrower tries to bring a defense during foreclosure. All participants did seem to be in agreement that in the end, nothing substitutes for proper underwriting and manufacturing of the loan. Standard & Poor's: How does one reasonably determine how much residual income a borrower needs and be able to defend that amount in litigation, if necessary? Due-diligence firms: Due diligence firms noted that underwriters should perform a reasonableness test: What documents were used to determine the borrower's ability to repay, what residual income was derived from these documents, and what is the basis to believe that the borrower has an ability to repay? A credit report should always be used to assess willingness to repay in service of any credit history. Diligence firms suggested attaching a calculation of the DTI and residual income to the borrower affidavit. Beyond reliance on the borrower's own assessment, educating the borrower on the basics of debt, income, and payments could help borrower understand whether or not the loan would cause them financial stress. While some panelists agreed that educating borrowers would be helpful, others noted that borrowers can at best acknowledge the inputs, but they cannot be relied upon to confirm the calculation of the DTI and can always claim that they did not understand all the details of what they were signing. Ultimately, the underwriter is the expert, and the responsibility is on them to determine ability to repay. Most panelists agreed that creating a summary page of an attestation in addition to hundreds of pages required in the

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

NOVEMBER 1, 2013 5
1210611 | 301674531

U.S. RMBS Roundtable: Originators, Aggregators, And Counsel Discuss New Qualified Mortgage Rules

loan file would prevent the important information from being lost or hidden. The goal of the CFPB's rule was to create responsible lending through confirmation of the borrower's ability to repay, and it will require educating the borrower and documenting that process. Originators/Aggregators: Originators still see many pitfalls in the lack of bright line rules in complying generally with the rule. Several panelists raised questions and concerns around residual income determination. Certain more subjective and intangible borrower characteristics could create material gaps in underwriting. For example, what if a borrower drives an SUV and frequently spends more than an average amount every month on gas? What if the borrower has undisclosed medical bills or health problems? When considering the rule, it states that a borrower should have enough funds for life expenses, but what should be included is not clear, and no standards of reasonable expenses are proscribed. Some lenders believe the only solution would be to overcompensate, underwriting to DTI below the 43% required for QM status. Other originators were less concerned with the bright line tests and believed that the best way to underwrite the loan is to limit credit to super-prime borrowers regardless of their product type (IO) or income/employment status (retired or self-employed borrowers with significant assets). The panelists discussed that loan origination processes might shift from focusing solely on filling in worksheets to becoming more akin to an interview, where an experienced underwriter is using subjective judgment to determine both the ability as well as the willingness to repay the loan. This is key, as many borrowers have chosen to default even though they have enough money to pay their mortgage obligation (a so-called strategic default). Standard & Poor's: How will the rule affect securitization trusts? What type of framework do originators contemplate when evaluating the risk of safe harbor, rebuttable presumption, or non-QM loans? Are these risks objective and quantifiable, and how will they be different than the current ones? Legal counsel: The panelists discussed the liability involved in underwriting a non-QM loan. Notably, the new rule adds assignee liability, which could affect the trust. Counsel generally agreed that the ultimate liability to the trust would be assignee liability through a defense to foreclosure. That is, for an assignee to liable for damages, a borrower must be in foreclosure and must bring suit against the foreclosing party alleging that the originator did not determine the borrower's ability to repay. While originators are liable in the first three years of a loan's life for affirmative claims, the possibility of such claims absent default is remote. Counsel agreed that the rule is clear that for a borrower to have a claim against an assignee in an affirmative suit, the violation of the rule must be apparent on the face of the disclosure statement. Most panelists agreed that this is not possible because the ability-to-repay requirement is not a disclosure requirement, and so TILA disclosures available to the assignee would not indicate whether the originator evaluated the borrower's ability to repay. But some attorneys/panelists did leave the door open for affirmative liability. They expressed that the CFPB was clear in its intention to align the liabilities of the originator and assignees and that the deep pockets of a securitization trust could make them a target in affirmative claims. Originators/Aggregators: Originators will need to consider what their expectations are for a borrower's likelihood of default and likelihood to bring suit in foreclosure. They will have to identify whether their processes have improved their chances of early suit. In addition, some cost-related questions remain open, such as whether legal fees are charged to the issuer or the trust in foreclosure proceedings if a borrower's claim is successful. Originators generally expect that the risk of defense to foreclosure will be low, but the uncertainty will cause them to overcompensate in

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

NOVEMBER 1, 2013 6
1210611 | 301674531

U.S. RMBS Roundtable: Originators, Aggregators, And Counsel Discuss New Qualified Mortgage Rules

originating to super-prime borrowers, possibly leaving out large sectors of the credit market. Panelists drew analogies for the treatment of non-QM loans to existing anti-predatory lending laws and the treatment of those loans by rating agencies. They noted that the ability-to-repay rule is fundamentally different from APL laws, as the new rule will apply to a much broader section of the loan market. Still, questions arose around whether rating agencies would treat loans as meeting the standards laid out in the rule until proven otherwise. For each, the question remains: How do you prove it? Will due diligence firms be involved in determining compliance with the rule? Due-diligence firms: Due diligence firms should expect to be involved in determining compliance with the rule to extent it can be verified. Many of the open questions regarding the subjectivity of the rule will complicate a diligence task. However, diligence firms will need to test compliance with the rule as a matter of their regulatory compliance review scope under relevant rating agency criteria. Diligence firms will be able to test many of the bright line QM requirements (product type, DTI using appendix Q, points and fees, APR) but should not be responsible for making an independent determination of the borrower's ATR. Diligence firms instead may focus on whether the documentation presented is sufficient for the originator to have made the ATR decision. To this end, it will be imperative for originators/aggregators to provide documents efficiently, completely, and clearly so that diligence firms may conduct the analysis. Specifically, diligence firms must be able to use the information provided in the loan documentation to recalculate the borrower's income, debts, residual income, DTI, and monthly payments as per the rule and determine the expected protection status of the loan or its general compliance with the rule. Regarding residual income and DTI for determination of compliance with the general rule where the rule does not give guidance to bright line limits, the diligence firms may use the underwriter's guidelines or other industry standard metrics to determine compliance. Standard & Poor's: Because there is no statute of limitation during the life of the loan that would limit the borrower's rights to bring a defense claim to foreclosure, and this new obligation and additional damages under the rule gives additional incentive to the borrower to do so, how do originators get comfortable assuming that only a subset of borrowers would choose to forego this option? Originators/Aggregators: Because prior to the new rule going into effect, TILA already required creditors to assess a borrower's ability to repay, there are observations for the number of suits brought under the law. Those observations show that there are exceedingly few cases, much less than 1% of the number of foreclosures each year. While borrowers' rights to raise defense exist, many borrowers find that obtaining representation can be prohibitively expensive and litigators may be reluctant to take cases that have low win probabilities. Some panelists acknowledged that this dynamic may shift slightly, as the assignee liability may create additional incentive to defend given increased damages. In addition, the subjectivity of the rule could increase expected probabilities for success, at least for non-QM loans. Originators and counsel also cautioned that despite the borrower's low probability of winning a suit, the suit itself could drive severity higher on a defaulted loan due to increased foreclosure timelines. This could have a two-pronged effect. First, the loan's severity could increase, as the rule adds an additional defense to the borrower's arsenal, which could cause the time it takes to complete foreclosure to increase. Second, depending on the portion of the market that does not have protections under the rule, another inundation of defaults and suits could continue to stall foreclosure timelines for all loans, systemically. But some panelists also pointed out that borrowers in default may actually speed foreclosure by making claims given today's relatively long foreclosure timelines. Any court claim by the borrower could speed the process of adjudication, which otherwise would drag on for months/years in the absence of claims by the borrower.

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

NOVEMBER 1, 2013 7
1210611 | 301674531

U.S. RMBS Roundtable: Originators, Aggregators, And Counsel Discuss New Qualified Mortgage Rules

Standard & Poor's: Although the borrower's right to a defense to foreclosure has no statute of limitation, the rule does indicate that a borrower's continued payment of the loan can be used as evidence that the creditor complied with the rule. After what number of payments will borrowers face significant difficulty in successfully bringing a suit? Originator/Aggregators: Originators expect that the judges presiding over these cases will look to the causes of nonpayment. If, after the origination of the loan, the borrower loses their job, the compliance with the ability to repay rule should be less relevant. Similar life events--such as divorce, illness, injury, or other matters that could not be known at origination--should not leave the originator open to suit for ability to repay. Originators expressed hope that the courts will recognize efforts to comply with the rule and not punish them for events that could not have been predicted. Holding originators or assignees accountable for information or events out of their control could adversely affect origination volume, especially to certain sectors of the mortgage market. In their view, if originators become spooked by certain types of loans, plenty of creditworthy borrowers will have their sources of credit closed off to them. Lenders need the ability to be subjective in what loans they write, or else certain markets will remain underserved. Standard & Poor's: How will this new rule affect mortgage-lending growth? Originator/Aggregators: The market continues to be dominated by GSEs. The current exemption from the underwriting test for QM loans for the GSEs will no doubt give them a competitive advantage. However, points and fees tests will still need to be maintained, as costs rise with compliance with the rule and agency loans carry lower balances on average. Lenders agree that the rule is generally aligned with responsible underwriting and will limit volume, even if lenders decide to approach higher-credit-risk borrowers. One impediment will be the scalability of more comprehensive underwriting and documentation standards under QM. Larger institutional lenders may already have an advantage in this regard, while smaller lenders may still need to work on compliance processes and controls across their organizations. However, originators indicated that they are generally already in compliance with the rule and won't need to make significant changes, perhaps only with documentation of compliance, but not in terms of credit decisions. The non-agency market, especially, already reflects the application of many of these rules as well as the resultant volume. As originators shy from credit risk to keep default expectations low, borrowers who are more difficult to underwrite--such as retirees, self-employed borrowers, recently graduated professionals, or borrowers with low down payments--may find access to credit to be much lower in the near term. Legal counsel: While originators will need to consider the additional risks to underwriting QM or non-QM loans, they must also weigh the trade-off in the market segments they access. Underwriting solely QM loans could raise disparate impact concerns, limiting credit availability to lower-income borrowers. [Editor's note: Subsequent to the roundtable discussion, on Oct. 22, 2013, federal regulators provided additional guidance stating that, absent other factors, a creditor's decision to originate solely QM loans would not elevate a creditor's fair lending risk.] Originators must also be considerate during underwriting, as mentioned above, that compliance with the rule could inadvertently cause fair housing issues if they inquire about certain prohibited information from the borrower. While the rule leaves significant room for interpretation, originators generally felt that the final rule to be implemented in January 2014 is better than expected. They expressed hope that regulators will be vigilant in pursuing violations that are reasonable. Originators still see challenges for originations of non-QM loans, but they don't believe they are insurmountable, and many expect that non-QM loans will be represented in origination volume throughout 2014. The

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

NOVEMBER 1, 2013 8
1210611 | 301674531

U.S. RMBS Roundtable: Originators, Aggregators, And Counsel Discuss New Qualified Mortgage Rules

challenges that remain are the market's pricing of QM safe harbor, rebuttable presumption, and non-QM loans; required credit enhancement levels; the effects of risk retention rules, which have yet to be finalized; and the ultimate costs associated with the assignee liability provisions in the rule.

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

NOVEMBER 1, 2013 9
1210611 | 301674531

Copyright 2013 by Standard & Poor's Financial Services LLC. All rights reserved. No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an "as is" basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT'S FUNCTIONING WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages. Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P's opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof. S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process. S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.standardandpoors.com (free of charge), and www.ratingsdirect.com and www.globalcreditportal.com (subscription) and www.spcapitaliq.com (subscription) and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.standardandpoors.com/usratingsfees.

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT

NOVEMBER 1, 2013 10
1210611 | 301674531