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.
Moody’s Investors Service recently completed a round of assessments of originators and aggregators of non-agency mortgages. One of the key findings showed that Redwood Trust has a loan review policy for prime jumbo mortgages that differs from other aggregators. “Redwood continues to be the only aggregator that we have assessed to date who does not conduct full reviews on 100 percent of acquired prime jumbo residential mortgage loans,” Moody’s said. Three banks ...
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