Moody's Investors Service has placed 40 RMBS re-securitization tranches with a current outstanding balance of $500 million on watch for possible downgrade.

The ratings changes affecting these re-securitizations of MBS originally issued from 2005 to 2008 stem from a reconsideration of loss projections on the underlying MBS whose collateral includes: payment option ARMs, Alt-A, jumbo and subprime-related loans.

Moody's believes the increased loss projections on the underlying certificates are likely to affect not only principal recovery on junior re-securitization bonds but probably on senior re-securitization bonds as well.

In December and January, thousands of re-securitized RMBS tranches from the 2005-2008 vintages were placed on watch for possible downgrade as a result of the loss projections.

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