Moody's Investors Service downgraded $4.27 billion in securities backed by Alt-A residential mortgages from Countrywide Financial as the loans continue to sour.
The rating agency has downgraded hundreds of billions of dollars of residential mortgage-backed securities in recent months as credit raters have steadily increased loss expectations on them at a time of low home prices, high unemployment and an uneven economic recovery.
Moody's on Friday said it cut 38 tranches and confirmed the ratings of another 13. They came from 11 transactions issued in 2006 by Countrywide, which was bought about two years ago by Bank of America Corp.
Alt-A loans typically were given to prime-rated borrowers who did not disclose income and/or assets. Loose underwriting standards reached a peak between 2005 and 2007.
RMBS helped feed the housing boom and wound up in the hands of investment funds or in more complicated pools known as collateralized debt obligations, in which underlying mortgage pools were further sliced into tranches according to their perceived risk.
