Moody's Investors Service put the primary and special servicer ratings of Bank of America ($6.98 0%) on review for possible downgrade after the nation's largest bank suspended foreclosure cases in 23 states to amend faulty affidavits.

Analysts said possible delays in foreclosures and longer real-estate owned timelines, as well as legal challenges to completed foreclosures and reputational risk for the banks' servicing operations led to the review. The deterioration of the company's collections, loss-mitigation, and timeline-performance metrics also prompted Moody's to initiate the review. Other factors that prompted the ratings agency's action include the relatively low level of modifications and high modification re-default rates on loans in Bank of America serviced residential mortgage-backed securities.

Bank of America's servicing portfolio, which is by far and away the largest in the nation, totals nearly 13.8 million loans with an outstanding principal balance of about $2.14 trillion.

In addition to focusing on the increased timelines, effectiveness of any new procedures, deterioration in collections and loss mitigation, Moody's plans to review Bank of America's quality-control processes and oversight of the foreclosure document execution department.

Last week, Moody's announced a similar review of JPMorgan's mortgage servicing operations.

Moody's rates servicers on a scale of SQ1 to SQ5 with the lowest number reflecting the strongest rating. Both Bank of America's primary and special servicer rating are currently rated SQ1.

Write to Jason Philyaw.