Moody's Investors Service continued downgrades on residential mortgage-backed securities transactions this week. The ratings agency's most recent move involved the downgrade of securitized tranches tied to 13 subprime deals valued at $1.4 billion. The deals were issued by GMAC-Residential Asset Securities Corp. prior to 2005. Moody's said the collateral "backing these loans primarily consists of first-lien, fixed and adjustable-rate subprime residential mortgages." The subprime RMBS downgraded by the firm were issued between 1999 and 2004. The downgrade comes on the heels of several other moves by the ratings agency to tighten the risk assessments surrounding certain securitized pools of subprime loans after noting the deteriorating performance of some subprime loans pooled that were securitized prior to 2005, according to Moody's. Moody's noted that some tranches of GMAC Mortgage transactions were placed on review for possible downgrades a year ago when concerns rose about servicer practices. "Firstly, GMACM used shared custodial bank accounts for multiple RMBS transactions and secondly, GMACM had to suspend foreclosures in 25 states due to irregularities in its foreclosure processes," Moody's wrote in its latest analysis. The ratings agency added, "Since the tranches were placed on review, GMACM has eliminated the use of a common bank account across RMBS deals and set up individual accounts for each transaction. Also, GMACM has reviewed and revamped its foreclosure process, and has lifted its suspension of foreclosure sales and evictions on a case by case basis." While the above issues may be less of a concern, Moody's said it continues to watch the pool of loans because state attorneys general are engaged in talks with servicers to figure out how to deal with loan modifications and foreclosures. "The ultimate settlement of those discussions may entail fines, loan forgiveness, cash payments to borrowers or other features that could reduce future cash flows to RMBS investors," Moody's said in its ratings update. "Moody's will continue to monitor the outcome and assess future credit implications on the ratings as the situation evolves." Write to Kerri Panchuk.