Wells Fargo & Co (WFC), JPMorgan Chase & Co. (JPM), Bank of America Corp (BAC): Looking for Big Yields? Think Twice Before Investing in These Securities

Fitch Ratings, on the other hand, has stated that many of the deals being highly rated by others would not have garnered such high marks from its own analysts. Similarly, Moody’s has also warned that some recent deals are not deserving of the high-quality ratings other agencies have bestowed upon them.

Investor, beware
Still, there seems no shortage of investors for these products, despite the questions about risk. Even with yields so low, investors should consider the unusual debate on the subject of riskiness among the rating agencies — as well as the fact that these loans seem to closely resemble something like a home equity loan on multimillion-dollar commercial properties — as warning signals.

With CMBSes underpinned by pools of loans, at least, if one goes sour, the entire investment won’t crumble — not true of single-loan bonds. With odds like those, I think investors would be wise to sit out this particular venture.

The article Looking for Big Yields? Think Twice Before Investing in These Securities originally appeared on Fool.com and is written by Amanda Alix.

Fool contributor Amanda Alix has no position in any stocks mentioned. The Motley Fool recommends Wells Fargo. The Motley Fool owns shares of Bank of America, JPMorgan Chase, and Wells Fargo.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.