Moody’s takes action on billions more RMBS

Moody’s Investors Service downgraded another $6 billion of adjustable-rate mortgage residential mortgage-backed securities issued by Wachovia. The four tranches of securities are backed by option-ARM loans. Wells Fargo Bank is the master servicer and is obligated to repurchase loans more than 90-days due. Moody’s said the ratings on the RMBS are the higher of Wells Fargo’s long-term issuer rating and the rating on the RMBS based on the credit strength of the underlying mortgage pool. As Wells Fargo repurchased delinquent loans in the pool over the past year, Moody’s said it reviewed the delinquencies to determine possible default rates for the remaining pools and ultimately issued the downgrade. Moody’s also issued ratings for another $4.5 billion of RMBS, backed by option-ARM loans, issued in nine tranches by World Savings that have Wells Fargo as master servicer. Six tranches were rated Aa2, one Aa1 and two triple-A. The agency also lowered the ratings on $728.7 million of option-ARM RMBS issued in nine tranches by Washington Mutual 2006 AR-19 due to the rapidly deterioration in the performance of the option-ARM pools “in conjunction with macroeconomic conditions that remain under duress.” The rating on each tranche moved further down the scale and all are rated non-investment grade. Moody’s downgraded another 37 tranches, confirmed ratings on six tranches and upgraded the ratings on two tranches of RMBS issued in six transactions by IndyMac. The debt is backed mostly by first-lien, Alt-A, ARM loans. The ratings adjustments are due to rapidly deteriorating performance of the pools and the overall macroeconomic conditions. Write to Jason Philyaw.