Moody's Investors Service announced changes to its rating methodology on Alt-A RMBS transactions, including option ARM loans. Separately, Moody's also updated its methodology for rating option ARM loan securitizations.

The Alt-A changes became effective Aug.1. 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 0.50% to 0.55%, as opposed to a weak Alt-A pool, which may increase from 1.50% to 3.00%, the rating agency explained.

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