Moody's downgrades raft of RMBS certificates as quality continues to suffer

Thursday, January 13, 2011

Moody's Mexico has moved to downgrade its ratings on a raft of different residential mortgage-backed securities (RMBS) and mortgage-backed debt instruments on continued increases in delinquency.

In three separate releases, Moody's downgraded four RMBS certificates from low-income mortgage lender GMAC Financiera and five from troubled non-bank mortgage and construction lender Hipotecaria Su Casita, along with a Su Casita residential mortgage-backed floating rate note.

In the releases, Moody's noted that the risk of servicing disruptions due to Su Casita's restructuring (Su Casita also services some of the GMAC RMBS) puts pressure on the notes' credit-worthiness.

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At the same time, the releases continued to highlight the sharply deteriorating quality of the notes, as the RMBS notes are made up mostly of loans to low-income borrowers who are still having a difficult time making ends meet following the 2009 economic recession.

Moody's said it projected lifetime cumulative gross defaults to rise to between 20% and 60% on the notes.