Moody's downgrades another $2.8 billion of IndyMac RMBS
Moody's Investors Service continues to downgrade subprime residential mortgage-backed securities issued by failed lender IndyMac because of the deterioration of the pools; a result of the overall economic recession. Analysts lowered ratings of 53 tranches valued at $2.8 billion, confirmed ratings of eight tranches, and upgraded three tranches from 11 RMBS transactions. The collateral for the deals includes first-lien, fixed-rate and adjustable-rate subprime home mortgages. Many of the downgraded tranches slid further down the non-investment grade chain to Moody's single-C categories. Any rating below triple-B is considered junk. When the credit crisis first began to unfold, rating agencies often supported the quality of triple-A ratings. But as ratings criteria tightened, subprime RMBS tranches bore the brunt. Earlier this year, Moody's updated the loss expectations on subprime pools issued in 2005 to 2007. Moody's said continued high levels of unemployment and housing market weakness perpetuate uncertainty in the macroeconomic environment. And analysts see "increasing potential for a double-dip recession, which could cause a further 20% decline in home prices." Still the agency maintains a baseline assumption of a roughly 5% further decline with prices stabilizing early next year. Although unemployment levels are expected to see "continued stress" through this year and into 2011. Write to Jason Philyaw.