Lawsuits aimed at forcing banks to buy back bad loans could ultimately hurt the ratings of the institutions that issued them, according to Fitch Ratings. Fitch noted that ratings are not likely to be affected by repurchases of loans from Fannie Mae and Freddie Mac, as recent settlements involving the government-sponsored enterprises have helped establish “some certainty” regarding a portion of a lender’s exposure. The credit agency warned, however, that as private-label RMBS tend to perform worse than agency RMBS, the ratings risk may be greater for banks if courts rule in favor of investors. On the other hand, says Fitch, it also is more difficult for investors to pursue private-label claims.

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