It's the credit crunch that somehow manages to keep on crunching: on Friday, Standard & Poor's warned that it may downgrade as many as 1,887 classes from 404 Alt-A backed RMBS issued in 2006 and 2007. The warning comes as many Alt-A mortgages, including no-doc, low-doc and negative amortization loans, are quickly showing signs of deterioration amid a burgeoning U.S. housing crisis. The rating agency said that the affected classes represent an original par amount of approximately $13.96 billion, and that the majority of impacted securities are backed by 2/28 and 3/27 hybrid ARMs, or are negative amortization loans (that's option ARMs, to regular HW readers). Thirty-three of the 1,887 affected classes likely to be downgraded are currently rated AAA by the rating agency, and represent nearly 30 percent of the overall affected dollar volume (in terms of original par). The AAA-rated tranches of RMBS deals are usually the largest in terms of dollar value. Click here to read a summary of all affected deals. S&P said that it will also reviewing CDO transactions with exposure to the affected Alt-A RMBS classes, and would likely issue downgrades to these CDO transactions as well should any of the negative watches enacted today result in a downgrade. For more information, visit http://www.standardandpoors.com. (H/T, Calculated Risk)