What does an AAA rating mean in context of Mortgage Backed Securities?
by Mortgage Rates on Sunday, October 24th, 2010 | 3 Comments
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it’s a typo they mean HAHAHA
less than AAAAAAAAAA
To buy and sell bonds you must get rated by one of the Rating Agencies. LIke Moody’s. Nothing is guaranteed to the debtors. That is why there are ratings; so the investors can judge their risk. If the economy goes bad, the lowest rated bonds would be expected to stop paying. They are rated BBB or B-. If things get worse , bonds rated B+ or A- might stop paying. It would be expected that AAA bonds would never stop paying. That is why they are the safest and also why they pay the least interest.
The wildcard came into play when AAA rated MBS turned out to be worthless. They stopped paying. So the rating was wrong..