Moody's Investors Service announced changes to its rating methodology on Alt-A RMBS transactions, including option ARM loans, the rating agency said. Moody's has also separately updated its methodology for rating option ARM loan securitizations.
The Alt-A changes go into effect on August 1, 2007. These alterations range from an increase in loss estimates, which is anywhere from 10% for stronger Alt-A pools, to an increase of more than 100% for weaker Alt-A pools. For example, a strong Alt-A pool may increase from 0.5% to 0.55%, as opposed to a weak Alt-A pool, which may increase from 1.5% to 3.00%, the rating agency explained.