Moody’s Investors Service downgraded nearly $44 billion in residential mortgage-backed securities containing Option-ARM and Alt-A mortgages issued by four lenders. Moody’s said the downgrades come from “rapidly deteriorating performance” of Option-ARM mortgage pools and more struggles coming for the overall economy. While Federal Reserve Chairman Ben Bernanke recently said a double-dip recession is unlikely, Moody’s notes “an increasing potential” for one. Unemployment remains high, and housing market estimates continue to weaken. Moody’s currently assumes a further 5% decline in home prices, which should stabilize in early 2011. However, if the economy slides back into recession, prices could drop as much as 20%. The credit rating agency downgraded $20.2 billion in RMBS issued by Harborview Mortgage Loan Trust between 2005 and 2007. These contained 197 tranches from 26 transactions. The collateral on these deals were Option-ARM mortgages. Another $16.3 billion of Option-ARM RMBS issued by Washington Mutual received an action by Moody’s, with 175 tranches receiving downgrades, two tranches were actually upgraded and another seven confirmed. Of the $4.5 billion in Option-ARM RMBS issued by a Deutsche Bank trust in 2006 and 2007, 46 tranches received downgrades with another three tranches confirmed. Moody’s then downgraded the ratings of 112 tranches from 12 RMBS transactions issued by Countrywide. More than $3.4 billion of Option-ARM mortgages backed these issuances. Write to Jon Prior.

Most Popular Articles

Fannie Mae, Freddie Mac watchdog prepping for "massive IPO"

The watchdog for Fannie Mae and Freddie Mac is interviewing Wall Street firms to handle a public offering that would dwarf any IPO in history, Fox says.

Dec 09, 2019 By
3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please