With the current recessionary environment, people on the Street are starting to question the lowering of subordination levels by the three rating agencies on jumbo RMBS deals.

In a recent UBS Warburg report, analysts studied whether the reduced subordination levels in the jumbo arena are still appropriate given the higher level of losses expected, especially in light of the recent statement from the Mortgage Bankers Association that total mortgage delinquencies in the third quater went up to 4.87%, which is the highest it has been since the third quarter of 1991.

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