Credit rating agency Moody’s Investors Service today took action on $10.5bn of Wells Fargo (WFC) jumbo first-lien, adjustable-rate residential mortgage-backed securities (RMBS) originated between 2005 and 2008, with the vast majority of the transactions being downgraded. The action is a result of continuing poor performance in the mortgage pools based directly on “macroeconomic conditions that remain under duress,” Moody’s report on the matter said. In all, Moody’s downgraded the ratings of 98 tranches of the Wells Fargo Mortgage Backed Securities AR Trust series, while upgrading only 17 of those transactions. The credit rating agency said risk is increased by the relatively small size of mortgages in the pools. In this case each pool contains less than 100 mortgages. “Even if a few loans in a small pool become delinquent, there could be a large increase in the overall pool delinquency level due to the concentration risk,” the report states. Write to Jacob Gaffney. Disclosure: the author holds no relevant investments.
1 minute readMoody’s Downgrades Nearly $10bn of Wells Fargo Jumbo Mortgage Securities
May 14, 2010, 5:16pm
Jacob Gaffney is formerly Editor-in-Chief of HousingWire and HousingWire.com. He previously covered securitization for Reuters and Source Media in London before returning to the United States in 2009. While in Europe for nearly a decade, he covered bank loans and the high yield market, in addition to commercial paper, student loan, auto and credit card space(s).see full bio
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Jacob Gaffney is formerly Editor-in-Chief of HousingWire and HousingWire.com. He previously covered securitization for Reuters and Source Media in London before returning to the United States in 2009. While in Europe for nearly a decade, he covered bank loans and the high yield market, in addition to commercial paper, student loan, auto and credit card space(s).see full bio
