DBRS Downgrades $4.3 Billion in U.S. RMBS
Earlier this week, rating agency DBRS decided that the slow-death approach to RMBS wasn't, apparently, good enough. The company downgraded 676 classes from 113 different residential mortgage-backed securities deals, citing an "increase in serious delinquencies relative to the available credit enhancement." Most of the downgrades involve first-lien collateral. "Given the level of serious delinquencies in the current pipeline and corresponding potential for significant future losses, excess spread is not expected to be sufficient to cover anticipated losses," the agency said in a press statement. The company managed to list all 676 affected classes and their affected dollar amounts -- for each individual class. Most of the affected classes are not at the AAA level, and most deals are from the 2005 and 2006 vintages. Housing Wire has gone to the trouble of calculating the mind-numbing totals for our readers, because we like you so darn much: $4.35 billion in total issuance value was downgraded in one fell swoop. Of that total, $2.96 billion represents downgrades to deals backed by first-lien collateral, while another $1.2 billion represents downgrades to deals backed by second-lien collateral. An additional $189.3 million was downgraded, as well, after DBRS ceased accounting for the value of any credit guaranty wrap provided by Financial Guaranty Insurance Corp. The downgrades span pretty much every issuer and trustee out there, but a few do stand out in terms of the dollar value involved. For example, one deal -- Long Beach Mortgage Loan Trust 2005-3 -- saw downgrades totalling just under $200 million. Long Beach Mortgage Company was the former subprime wholesale arm under Washington Mutual. DBRS is a smaller and newer agency than the so-called "holy trinity" of Standard & Poor's, Moody's Investors Service, and Fitch Ratings. The SEC granted official status to DBRS in 2003, giving it equal status with the other bond raters in the US, despite its smaller stature. For more information, visit http://www.dbrs.com.