The rating service made a couple of issuer-friendly tweaks to its MBS loss model criteria proposed in June. The rating service, for the first time, will con-sider catastrophic risk when assessing loans.
The rating service will continue to take a relatively harsh view of mortgages underwritten with alternative documentation even though they have per-formed better than expected.
Investors in non-agency MBS face increased risks from GSE-eligible mortgages according to Moody's. The loans are allowed to have relatively high DTI ratios while still receiving QM status.