New York Attorney General Andrew Cuomo has made a deal with three of Wall Street´s big credit-rating agencies (Fitch Ratings, Moody´s Investors Service, and Standard & Poor´s) to rethink how they judge investments held by a problematic amount of mortgage debt.

They feel that this new overhaul will have a big effect on the industry. Their deal would apply to the problematic/risky, non-prime, U.S. loans, and would put an end to “ratings shopping”. Ratings shopping is where credit-rating agencies are fighting against each other. The rating industry has been accused of giving good ratings to businesses with prominent Wall Street Investment Banks.

Before, investment banks could and normally would go to all 3 rating agencies for a score, and then would use and pay the one that gave the best rating. Now with the deal, the agency will be paid beforehand, no matter their decision, so there will be no persuasion to give a high rating in order to be chosen.

A letter agreement was also signed by the 3 agencies, affirming their agreement to keep working with Cuomo to try and better the mortgage industry. Some of the other changes being implemented requires the investment banks to provide more exact data on package loans before a rating will be given. The standards for review will also be posted on each organizations´ website. These changes should be ready to be put into action in about 6 months.