Last Updated: August 2, 2021

Housing Loans1
1.

Risk of Housing Loan and Credit Enhancement
Credit enhancement for residential mortgage backed securities (RMBS) can be broken down into fourtranches: The first tranche in response to bad-loan risk; tranche in response to interest-rate risk; tranche inresponse to commingling risk; and the final tranche in response to setoff risk. The rating of RMBS is aprocess of calculating a required level of credit enhancement for RMBS in response to these various risks.
Credit enhancement is embedded in the RMBS scheme either in the form of collateral in excess ofclaims or in the form of cash reserves (Figure 1). Some RMBS schemes deem the tranche of credit
enhancement and the tranche of liquidity enhancement as seller’s beneficiary rights.
Figure 1:Example of correspondence relationship between underlying assets and RMBS
(Underlying Assets)(RMBS)

Preferred beneficiary rights/
Senior corporate bonds(Rating: AAA)

Housing loan claims

Cash reserves

2.

Sales to investors

Subordinated beneficiary rights/
Subordinated corporate bonds(Response to bad-loan risk)(Response to interest-rate risk)(Response to commingling risk)(Response to setoff risk)(Response to liquidity risk)

Tranche of credit
enhancement
Tranche of Liquidity
enhancement

Bad-loan risk
(1) Self-resident housing loans, etc.
Credit enhancement in response to the bad loss risk is in preparation for losses arising from loan
defaults by debtors and their bankruptcy. The credit enhancement (in response to the bad-loan risk)
is calculated by an analysis of the trend of bad loans and in consideration of the delinquency
percentage and prepayment percentage before maturity based on historical data of the housing loan

1

Rating investment purpose condominium loans follows basically the same methodology presented herein. The same
methodology is basically applied to apartment loans, except for the bad-loan risk, for which a different methodology isapplied.
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https://www.jcr.co.jp/en/pool. The following is cited as the feature of housing loan claims: With residential houses offered ascollateral, debtors have a strong will to repay their housing loans and they place a high priority on
repayments of their housing loans, so housing loans are the claims whose bad-loan percentage isrelatively low in comparison with shopping credits and cashing advances.
(a) Estimated bad-loan rate
Since the bad-loan percentage is apt to heavily hinge on debt to (yearly) income ratio (DTI), loan
to value ratio (LTV), business categories of debtors, passed years of claims, and other attributions of
the housing loan pool, individual attributions should be analyzed in details. DTI is the ratio of theamount of annual repayment by a housing loan debtor to its annual income. The higher the DTI ratio,
the heavier is the burden of monthly repayments on the debtor. Generally speaking, it becomesdifficult for the debtor to cope with decreases in its income, increases in its expenses, and otherchanges. Consequently, the bad-loan percentage and the delinquent-loan percentage tend to become
higher. The LTV (loan to value ratio) is the ratio of the amount of a housing loan claim to the priceof collateral real estate. Generally speaking, a housing loan shows in many cases the higher the LTV,
the less amount of money to spare the debtor has on hand. As a result, the bad-loan percentage andthe delinquent-loan percentage tend to become higher. Even when the full repayment of a housing
loan becomes difficult in the future, the lower the initial LTV the higher is the possibility that themarket price of the collateral property may exceed the outstanding balance of the housing loan claim.
In many cases, a housing loan with a low LTV stops short of becoming a bad loan or a delinquentloan by loan refinancing or by the sale of the collateral property at the discretion of the debtor.
Since housing loans are long-term claims, it is necessary to analyze their trend according to theirelapsed years. The estimated base case bad-loan rate, etc. are calculated in consideration of theaverage value, standard deviation, and trend of individual parameters. Chronological development of
occurrences of losses in parent claims (loss curve) and chronological development of repayments
before maturity are estimated using static data, etc.
(b) Stress multiplying factors
The table below shows standard stress multiplying factors of RMBS. In the case where only ashort time has elapsed since the drawdown of a housing loan, the loan repayment percentage before
maturity is estimated to be low.
Stress Multiplying Factors
Bad loan/Delinquent loan

Bad loan/Delinquent loan

Repayment before maturity

First five years

After the first five years

Entire period

AAA

3.5

3.5

0.5

A

2.5

2.5

0.5

BBB

2.0

1.5

0.75

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In securitizing investment purpose condominium loans, stress multiplying factors greater than standard ones are adopted
in some cases because debtors’ willingness to repay their loans is considered not as strong as in the case of residential
housing loans.

Actually applicable stress multiplying factors are determined by individual RMBS projects inconsideration of the following factors.
■ DTI
■ LTV
■ Originator’s Screening and Collection Systems· Particularly, the quality of underlying claims, so to speak, the probability of bad loans anddelinquent loans increases and decreases depending upon the screening standard.
· A due diligence meeting pays attention to the screening standard at the time of drawdown of a
relevant loan and changes in the screening standard thereafter (when the loan balance has sharply
increased at one time because of a business strategic campaign conducted by the bank, thescreening standard itself may possibly have been relaxed.)· For example, even in the case of the same DTI, the screening standard on business conditionsof a place of employment may possibly have been eased. Even in the case of the same LTV, theevaluation method of collateral properties may possibly have been eased.
■ Regional economic trend (unemployment rate, land-price trend, etc.)■ Debtor’s employment conditions (salaried worker or self-employed worker)■ Age (age distribution at the time of full repayment)■ Use of funds (residential housing loans or investment purpose condominium loans)■ Regional concentration to an extremely high degree (risk of earthquake)(c) Cash flow analysis considering waterfall
Given the waterfall of interest and principal collections, the stressed estimated bad-loan rate isused to calculate the credit enhancement level required for each tranche to fully redeem by the final
maturity date. Even if the stressed estimated bad-loan rate is the same, the required credit
enhancement level varies greatly depending on the redemption method (sequential redemption or pro
rata redemption), the presence or absence of default traps, and the conditions for early redemption.
(d) Recovery from default receivables
If the originator is the first-ranked mortgagee on the property, the credit enhancement level iscalculated by incorporating the recovery from the default loan by mortgage execution. Assuming thatthe collateral value of the property will decrease over time, the collection amount is calculated bymultiplying a ratio corresponding to the rating and then deducting the property sale cost and thecompensation for the special servicer.

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https://www.jcr.co.jp/en/(2) Apartment loans
While self-resident housing loans use the debtor's salary as the main source of repayment,
apartment loans use income from the apartment business as the main source of repayment. The leveland stability of income from the apartment business varies significantly from individual apartment
loan to individual apartment loan, and the estimated bad-loan rate is often not homogeneous. If there
is a fixed rent master lease contract (sublease contract) with the debtor (apartment owner) for a certain
period of time from completion, and the sublease company substantially provides a rent guarantee
for that period, the default of the apartment loan during the period will remain at a low level as longas the sublease company does not suffer from credit deterioration. Thus calculation of the required
credit enhancement level based only on the historical default rate of the originator's entire loan poolrisks underestimating the total default amount after termination of the fixed rent period or when thesublease company's credit deteriorates.
For the above reasons, the default rate of apartment loans is basically calculated based mainlyon the debt service coverage ratio (DSCR)2.
(a) Estimated bad-loan rate for individual loan
JCR assigns an estimated bad-loan rate to each loan based on the DSCR level in the loan-byloan data and adjusts it by considering the location, income and expenditure simulation and debtor
attributes in the loan-by-loan data. The originator's entire pool historical default rate is used as
reference information in adjusting the estimated bad-loan rate when needed.
(b) Stress multiplying factors
JCR calculates the weighted average estimated bad-loan rate of the securitization pool from theestimated bad-loan rate of each loan and the principal balance at the time of cut-off (estimated badloan rate of the base case).
The stress multiplying factors applied in rating apartment loan securitization is determined foreach case in consideration of the following factors, but usually, a stress multiplying factor higher than
the standard stress multiplying factors in (1) above is adopted.
■ LTV■ Originator’s Screening and Collection Systems· Particularly, the quality of underlying claims, so to speak, the probability of bad loans anddelinquent loans increases and decreases depending upon the screening standard.
· A due diligence meeting pays attention to the screening standard at the time of drawdown of a2

If the number of receivables is very large and the sublease contract has a small impact on the historical default rate, JCR considers using a methodof calculating the estimated bad-loan rate of the receivable pool based on the historical default rate of the originator's entire loan pool. Even in thiscase, the stress multiplying factors are usually higher than the standard stress multiplying factors in (1) above.
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https://www.jcr.co.jp/en/relevant loan and changes in the screening standard thereafter (when the loan balance has sharply
increased at one time because of a business strategic campaign conducted by the bank, thescreening standard itself may possibly have been relaxed.)· Policy on how to deal with request for loan restructuring■ Method of dealing with restructured receivables in the securitization transaction (including
evaluation of certainty of fulfillment of repurchase obligation when repurchase obligation is
imposed on the originator)■ Regional economic trend (unemployment rate, land-price trend, etc.)■ Supply and demand trends and outlook for the rental housing market■ Is the debtor a land owner or borrowing for a pure investment purpose?
■ Regional concentration to an extremely high degree (risk of earthquake)(c) Consideration of rent guarantee
If the sublease company provides a substantial rent guarantee for a certain period of time fromcompletion, in the cash flow analysis, JCR takes into consideration the rent guarantee up to the timeof the first review of the guarantee amount regarding the tranche with a rating that does not exceed
the creditworthiness of the company that provides the rent guarantee.
(d) Cash flow analysis considering waterfall
Given the waterfall of interest and principal collections, the stressed estimated bad-loan rate isused to calculate the credit enhancement level required for each tranche to fully redeem by the final
maturity date. Even if the stressed estimated bad-loan rate is the same, the required credit
enhancement level varies greatly depending on the redemption method (sequential redemption or pro
rata redemption), the presence or absence of default traps, and the conditions for early redemption.
(e) Recovery from default receivables
If the originator is the first-ranked mortgagee on the property, the credit enhancement level iscalculated by incorporating the recovery from the default loan by mortgage execution. Assuming thatthe collateral value of the property will decrease over time, the collection amount is calculated bymultiplying a ratio corresponding to the rating and then deducting the property sale cost and thecompensation for the special servicer.
When incorporating the collection from the mortgage property, JCR sets the expected collection
rate in consideration of attributes such as the property location. In the case of a revolving mortgage,
the settlement of principal at the time of securitization is a requirement for incorporating the recovery
from the default loan.

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Interest Rate Risk
Credit enhancement in response to interest rate risk is the subordination in preparation for a negativeinterest-rate spread that emerges when the interest rate of a housing loan differs from that of RMBS. The
amount of credit enhancement is determined by the corresponding degree of the risk of a negative interestrate spread. When the base (interest) rate of RMBS is equal to that of the underlying (backing) claims orwhen the interest-rate risk of RMBS is hedged by swaps or any other means, this credit enhancement is
unnecessary.
(1) Negative spread risk involved in an interest-rate type mismatch between a housing loan and RMBS
If there is any interest-rate mismatch between a housing loan and RMBS, the mismatch poses arisk of a negative interest-rate spread. A fixed-interest-rate selective housing loan makes it possible
to fix the interest rate for a certain period. At the time of expiration of the period for the fixed interest
rate, the debtor can select either a fixed interest rate or a variable interest rate. It is also possible tochange from a variable interest rate to a fixed interest rate. The debtor has the freedom to choose afixed interest rate or a variable interest rate. In this context, the following cases pose the risk of anegative interest-rate spread: In a downward trend of interest rates, the debtor selects a variableinterest rate, while RMBS applies a fixed interest rate; and in an upward trend of interest rates, thedebtor selects a fixed interest rate, while RMBS applies a variable interest rate.
(2) Basis risk
When the base (interest) rate of a housing loan is different from that of RMBS, the risk that thelatter may become higher than the former is referred to as “basis risk”.
The interest rate of a housing loan is often linked with the long-term prime rate or the short-term
prime rate, while that of RMBS is often linked with “Libor” rate. In this context, when the difference
between Libor rate and the prime rate is little or when the Libor rate becomes higher than the prime
rate, a negative interest-rate spread emerges. The interest rate of a housing loan is usually reviewed
twice a year. The path-through-type RMBS interest rate is usually reviewed on a monthly basis.
Particularly in an upward trend of interest rates, the RMBS interest rate increases a head of the
housing loan interest rate and becomes higher than the latter, which may possibly give rise to anegative interest-rate spread.
When a fixed interest rate is applied to the full amount of RMBS, the potential of further
decreases in interest rates of underlying (backing) claims is extremely limited in the current
conditions of lower interest rates. The subordination in response to a negative interest-rate spreadnormally remains at a low level. In recent years, however, competition in providing housing loans
has been intensified with a preferential interest rate applied to them in many cases. In the case where
there is a negative interest-rate spread between the RMBS fixed rate and the housing loan interest(with the former being higher than the latter) as described immediately above, there is a possibility
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4.

Commingling Risk
The funds collected from the underlying debtors are pooled in the originator’s financial institution andafter a lapse of a certain period the collected funds will be remitted to the trust bank and the SPC(hereinafter called “SPV”). If the originator becomes bankrupt during the time before the remittance of thecollected funds, there is a risk that the collected funds may be commingled with the originator’s otherassets.
In a RMBS project which reserves receiving from the debtors their consent to the transfer of claims
and notifying them of the transfer of claims and does not make it apparent that the collected funds arecovered by the deposit insurance, it is generally required to set aside an estimated equivalent amount ofcollectible funds for one collection period as the credit enhancement in response to the commingling risk,
except in the case where the commingling risk is deemed to be small or low because the collected funds
stay only one day at the originator’s financial institution and due to other reasons.
When the rating of the servicer bank falls below “BBB Flat/Negative Direction”, however, it ispossible to set aside the initial reserve for the credit enhancement in response to the commingling risk by(a) additional cash in trust with the equivalent amount of the credit enhancement in response to thecommingling risk within 30 days; or by (b) advance payment of an estimated amount of collectible funds.

5.

Setoff Risk
When any underlying debtor has a deposit at the originator, the underlying depositor can set off thedeposit due from the originator against the housing loan at the time of the originator’s bankruptcy. The
deposit insurance covers a deposit to the extent of the deposit amount up to ¥10,000,000. When any debtor
has a deposit of no more than ¥10,000,000, there is no possibility that the debtor may take any setoff risk.
In case that any debtor’s deposit exceeds the benchmark of ¥10,000,000, there is a possibility that the partof the deposit in excess of ¥10,000,000 may be set off against the housing loan (the part of the deposit
beyond ¥10,000,000 is hereinafter called the “amount of money exposed to the setoff risk”).
For this risk, of the amount of each debtor’s deposit, the amount of money in excess of the deposit
insurance cap (¥10,000,000) in terms of customer protection is deemed to be the amount of money exposedto the setoff risk. For each debtor that has a deposit in excess of the deposit insurance cap, the total amountobtained by subtracting ¥10,000,000 from the result of deducting the debtor’s outstanding deposit from theoutstanding claim is the credit enhancement in response to the set off risk).

6.

Liquidity Risk
If the originator becomes bankrupt and the delivery to the trustee of collected funds from the debtors
falls into arrears, there is a possibility that payments of various charges and dividends on preferredbeneficiary rights may run short of resources. In response to this risk, the following measures are taken: In
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the case where a fixed interest rate is applied to the relevant RMBS with a financial institution as theservicer, an amount of money equivalent to one month’s dividends on preferred beneficiary rights, trust
fees and other various fees are set aside as cash reserves; and in the case where a variable interest rate isapplied to the relevant RMBS with a financial institution as the servicer, an amount of money equivalent
to three months’ dividends on preferred beneficiary rights, trust fees and other various fees are set aside as
cash reserves.
7.

Transfer of a Housing loan Claim, Right to Ask a Guarantor to Make Good on the Guarantee, andMortgage
A housing loan from a bank, etc. is often accompanied by a guarantee of the guarantee company
belonging to the bank to ensure that the bank secures complete performance of the housing loan due fromthe debtor. In this case, a mortgage is placed on the real estate owned by the debtor with the guarantee
company as the mortgagee and with the prior reimbursement claim as the secured claim. After having madegood on the guarantee to the bank, the guarantee company can collect the housing loan claim by foreclosing
the mortgage in the form of the reimbursement claim against the debtor.
When the bank transfers the housing loan to the SPV, the right retained by the bank to ask the guarantee
company to make good on the guarantee will be transferred to the SPV due to the concomitant effect of
the guarantee as a matter of course. Meanwhile, the mortgage will not be transferred to the SVP and theguarantee company will continue to hold the mortgage. It is the point of contention in the rating of a RMBS
project how much the RMBS project can expect to collect the housing loan claim by asking the guarantee
company to make good on the guarantee and by foreclosing the mortgage.
(1) Right to ask a guarantor to make good on the guarantee
In the case where each housing loan is accompanied by a guarantee company’s guarantee, noloan losses will emerge in the housing loan pool as has been transferred to the SPV provided that theguarantee company makes good on the guarantee. A guarantee contract concluded between a bankand a guarantee company includes the (exceptional) clause that exempts the guarantor from making
good on the guarantee. With the exempt events limited to the bank’s violation of the guarantee
contract as well as the bank’s intention and gross negligence, however, if either of the exempt events
applies to the bank, the bank is obliged to repurchase the relevant claim (housing loan pool) due tothe bank’s violation of the representations and warrantees and the consigner’s violation of thecommitments in the trust contract, etc. If any bad loan emerges, the bank may sometimes select the
choice to hold discussions with the relevant debtor and ease the loan conditions (interest reductionand exemption, extension of the term, etc.) instead of applying the acceleration clause (event ofdefault by the debtor) and asking the guarantor to make good on the guarantee, taking into
consideration the possibility to collect the claim and other factors. In the latter case, the bank is also
obliged to repurchase the claim in question due to the bank’s violation of the representations and8/12
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warranties and the consignor’s violation of the commitments in the trust contract, etc.
Figure 2: Right to Ask a Guarantor to Make Good on the Guarantee, Mortgage, and Group Credit Life Insurance<Before Securitization>

Life Insurance Company

Group Credit Life Insurance Contract

Underlying Debtors

Housing Loan Claims

Non-life Insurance Policy
Non-life Insurance
CompanyMortgage

PledgeOriginator(Bank)
Right to Ask a Guarantor
to Make Good on the Guarantee
Guarantee Company<After Securitization>
Life Insurance Company

Memorandum of the GuaranteeGroup Credit Life Insurance Contract

Trust Bank

Housing Loan Claims

Originator(Bank)

Underlying Debtors

Non-life Insurance Contract
Non-life Insurance
CompanyMortgage

PledgeGuarantee Company

Right to Ask a Guarantor to Make Good on the Guarantee

In this context, with the following as the requirements, JCR considers it possible to give a rating to
the tranche of credit enhancement in response to the bad-loan risk in such a manner that the rating reflects
the ability of a guarantee company to make good on the guarantee.
■ All housing loans from a bank are accompanied by a joint and several guarantee of the guarantee
company affiliated with the bank.
■ As a general rule, the bank has been receiving from JCR a rating at a certain level or even higher as
required.
■ The business unity of the bank and the guarantee company affiliated with the bank is strong(otherwise, measures are provided under the contract).
■ With the guarantee contract limiting the exempt events (to the bank’s violation of the guarantee
contract as well as the bank’s intention and gross negligence, as an example), if either of the exempt
events applies to the bank, the guarantee contract obliges the bank to repurchase the relevant claim
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- In the case where the exempt event is not limited (for example, buildings are damaged by anearthquake), the RMBS scheme ensures that responses will be taken to the emergence of the
exempt event.
■ If the bank eases the loan conditions (interest reduction and exemption, extension of the term, etc.),
the guarantee contract obliges the bank to repurchase the claim in question due to the bank’s violationof the representations and warranties and the consignor’s violation of the commitments.
■ A legal opinion to the effect that the transfer of the claim is a true purchase and sale is to be submitted.
■ Credit enhancement measures in response to various risks including interest rate risk, setoff risk, etc.
that cannot be covered by the guarantee contract are separately taken in the form of subordinatedbeneficiary rights and cash reserves.
* When the guarantee company is a subsidiary of the originator, the originator’s bank takes the credit
enhancement measures for a RMBS project on behalf of the group. Even in this case, the following
items explain the reasons that the true purchase and sale is not impaired.
(a) The parent company’s equity share of its subsidiary is a problem having a different nature fromthat of a transaction between the parent company and its subsidiary.
(b) Each housing loan is not accompanied by the subsidiary company’s guarantee on the occasionof its securitization. Instead, the guarantee has been provided at the time of drawdown of the
housing loan regardless of the securitization. Any parties involved in the securitization are awarethat the relevant claim is accompanied by a guarantee of the assignor’s subsidiary and conduct
buying and selling transactions of the relevant claim with the pricing based on that premise.
(2) Judgment of to what extent the claim can be collected by foreclosing the mortgage
Even if the guarantee company becomes bankrupt, its mortgage will not necessarily betransferred to the SPV as a matter of course. As the guaranteed debts are cut in the process of theinsolvency proceedings, the reimbursement claim acquired by the guarantor as the result of making
good on the guarantee also decreases in the amount and the collection of the claim by foreclosing the
mortgage is deemed to be limited to the extent of the residual claim. An RMBS scheme under which
the guarantee company transfers the mortgage to the SPV or creates mortgage-on-mortgage for the
SPV at the time of the closing in case it goes bankrupt is likely to increase the possibility to collectthe claim by foreclosing the mortgage to a certain extent. However, under this scheme, as creation ofmortgage-on-mortgage will not be perfected against debtors until the trigger events such as
insolvency of the guarantee company occur, the possibility remains that the receiver/administrator
may disapprove the perfection at the time of insolvency of the guarantee company when the guarantee
company goes bankrupt. If the guarantee company becomes subject to the corporate rehabilitation
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proceedings, the mortgage or the mortgage-on-mortgage will become the rehabilitation security
rights. Accordingly, no voluntary repayments can be received beyond the scope of the rehabilitation
proceedings. For the rating on the tranches higher than that of the guarantee company, recovery rateby foreclosing the mortgage is to be prudently estimated after the possibility of avoiding these legal
restrictions is fully examined. When considering the recovery from collateral property, JCR sets an
expected recovery rate, taking into account such factors as the price and location of such property,
priority of mortgages and cost of selling the property and assumes certain time is required forforeclosure.
(3) Group credit life insurance
If the housing loan is covered by group credit life insurance, JCR considers whether the SPV isa securitization scheme that can effectively receive the insurance money at the time of the debtor's
death, and then determines how to incorporate group credit life insurance into the RMBS rating.
8.

Points of Contentions in the Case of Housing loans from a Regional Financial Institution(1) Regional concentration
For housing loans from a regional financial institution, it is impossible to avoid the fact that
regional concentration of debtors becomes relatively high. The points of contention in the regional
concentration of debtors are the reflection of the regional economic impacts including economic
growth rates, income levels, etc. as well as earthquake risks. For earthquake risks, in the case of an
extreme regional concentration of debtors, for example, when debtors are extremely concentrated ona region where earthquakes take place frequently and on the same apartment block, it is necessary to
make stress adjustments and to take credit enhancement measures. JCR considers it possible to takesufficient responses to a regional concentration by implementing measures to disperse debtors, forexample, by means of preventing the debtors from their concentration in the same community, etc.
Concerning regional economic impacts, it is necessary to conduct a survey of unemployment
rates and other economic indices, research of the land price trends, and so on and to take into
consideration their impact on the extracted housing loan pool.
For a RMBS scheme that avoids the risk of regional concentration of debtors, the following
securitization efforts should be seriously taken into consideration: For example, housing loans frommultiple regional institutions that are regionally dispersed are collectively securitized.
(2) Subordination in response to setoff risk (setoff subordination)
A regional financial institution having a few or little competitors is often deemed to function as
the main bank where consumers in the region maintain their payroll accounts. Besides, in comparison
to urban areas, debtors of housing loans are often expected to hold their savings accounts there.
Concerning a RMBS project with a regional financial institution as the originator, JCR believes that
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it is a problem to be carefully investigated how much the RMBS Project should take credit
enhancement measures for the setoff subordination.
9.

Monitoring
In principle, JCR monitors the performance of underlying assets and reviews the rating as long as a
rated debt is outstanding. JCR conducts monitoring on a constant basis to check the performance ofunderlying assets, including the monthly default rate; changes in the subordination ratio; and capabilitiesof parties to the structure to carry out their duties. When conducting the review of credit ratings, JCR
reexamines, as necessary, the base rate and other rating assumptions in light of the performance ofunderlying assets and economic conditions and analyses cash flows based on these assumptions with due
consideration given to the remaining term of securitization products. Rating review is held on a regularbasis, as well as on an ad hoc basis as necessary in case of a sudden change or event.

Japan Credit Rating Agency, Ltd.
Jiji Press Building, 5-15-8 Ginza, Chuo-ku, Tokyo 104-0061, Japan
Tel. +81 3 3544 7013, Fax. +81 3 3544 7026
Information herein has been obtained by JCR from the issuers and other sources believed to be accurate and reliable. However, because of the possibility of human or mechanical error as well as other factors,
JCR makes no representation or warranty, express or implied, as to accuracy, results, adequacy, timeliness, completeness or merchantability, or fitness for any particular purpose, with respect to any suchinformation, and is not responsible for any errors or omissions, or for results obtained from the use of such information. Under no circumstances will JCR be liable for any special, indirect, incidental orconsequential damages of any kind caused by the use of any such information, including but not limited to, lost opportunity or lost money, whether in contract, tort, strict liability or otherwise, and whether
such damages are foreseeable or unforeseeable. JCR's ratings and credit assessments are statements of JCR's current and comprehensive opinion regarding redemption possibility, etc. of financial obligations
assumed by the issuers or financial products, and not statements of opinion regarding any risk other than credit risk, such as market liquidity risk or price fluctuation risk. JCR's ratings and credit assessments
are statements of opinion, and not statements of fact as to credit risk decisions or recommendations regarding decisions to purchase, sell or hold any securities such as individual bonds or commercial paper.
The ratings and credit assessments may be changed, suspended or withdrawn as a result of changes in or unavailability of information as well as other factors. JCR receives a rating fee paid by issuers for
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