Moody's downgrades more than $10 billion in prime jumbo RMBS
Moody's Investors Service (MCO) slashed the ratings on billions of dollars worth of prime jumbo residential mortgage-backed securities issued by Wells Fargo (WFC) and Merrill Lynch (ML) this week. The ratings agency downgraded the ratings of 195 tranches from 23 prime RMBS jumbo deals issued by Merrill Lynch Mortgage Investors Trust from 2001 to 2004. The agency also confirmed the ratings of 12 tranches from the same deals. Overall, the agency took action on $2 billion in jumbo RMBS. Moody's blamed the lowered ratings on the "deteriorating performance of prime jumbo pools securitized before 2005." In January, Moody's adjusted its criteria for RMBS issued before 2005. Analysts said that new approach means downgrades will likely continue for some time. "Although most of these pools have paid down significantly, the remaining loans are affected by the housing and macroeconomic conditions that remain under duress," analysts said of the current downgrages. Moody's then took action against $8.2 billion prime jumbo RMBS issued by Wells Fargo Mortgage Backed Securities Trust between the years 2002 and 2004. The agency downgraded the ratings on 281 tranches and confirmed the ratings of 44 tranches from 53 prime jumbo deals issued by Wells Fargo Mortgage Backed Securities Trust. The loans backing the deals are primarily first-lien, fixed and adjustable-rate prime jumbo residential mortgages. Write to Kerri Panchuk.