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Wednesday, August 27, 2008

Lookout When Prime Isn't Even Prime

Moody’s is finally sniffing around ‘prime’ mortgages now…

Moody's Reviewing All 2006, 2007 Jumbo Mortgage Bonds (Update1): “Moody's Investors Service is stepping up scrutiny of all prime-jumbo mortgage securities issued in 2006 and 2007 as the surge in U.S. foreclosures spreads beyond subprime loans.

Moody's is studying its rankings on the securities after late payments started increasing more quickly in recent months, according to a statement today from the New York-based ratings company. The bonds aren't all under formal reviews for downgrades, said Thomas Lemmon, a spokesman.

Defaults among homeowners “across the credit spectrum”' have soared as home prices slump, mortgage rates rise and lenders rein in debt offerings, Moody's said. “Serious delinquencies” for prime-jumbo loans in securities rose 72 percent between January and June to 1.7 percent of balances, from 1 percent, according to Moody's.”

Lookout when prime isn’t even prime...