somebody just posted this stuff in a new thread but it is relevant here also:

S&P may downgrade $12 bln of subprime securities
Changes by rating agency could increase rates on subprime mortgages
http://www.marketwatch.com/News/Story/sp-may-downgrade-12-bln/story.aspx?guid=%7BCB3BF07B%2DBCAA%2D4F55%2DAEF5%2DF9C22E5D4570%7D

S&P finally says subprime is mostly junk
Commentary: New methodology is death knell for the troubled industry
http://www.marketwatch.com/news/story/sp-finally-says-subprime-mostly/story.aspx?guid=%7BDFBA4993-031E-4E88-8F56-5B08FD9AA07D%7D
“S&P, one of the three main credit-rating agencies that served as enablers of the subprime mortgage boom, announced Tuesday that it would lower its ratings on 612 bonds, a small portion of the mortgage-backed securities it had given its seal of approval to.

But the bigger news is that S&P isn’t going along with the charade any more. S&P said it would change its methodology for ratings hundreds of billions of dollars in residential mortgage-backed securities.

And it would review its ratings on hundreds of billions of dollars in the more complex collateralized debt obligations based on those subprime loans.

A lot of debt will be downgraded to junk status. A lot of that debt will have to be sold at fire-sale prices. A lot of pension funds and hedge funds that once thrived on the high returns they could get from investing in subprime junk will now lose a lot of money.

S&P’s announcement is a death warrant for the subprime industry. No longer will mortgage brokers be able to help buyers lie their way into a home. Fewer stressed homeowners will be able to refinance their mortgage, thus extending and exacerbating the housing bust.

“We do not foresee the poor performance abating,” S&P said. Prices will fall, and foreclosures will rise. More mortgage fraud will be uncovered as the tide goes out.”