MOODY'S RATES BOSTON COMPANY'S MORTGAGE SECURITIZATION Aaa
Moody's Investors Service has assigned ratings of Aaa to the senior certificates in The Boston Company's securitization of 30-year adjustable-rate super jumbo mortgages to high net worth borrowers. Moody's also rated other tranches Aa2 to B2. Moody's vice president Diane S. Westerback said the ratings are based on the credit support provided by subordination and the strong credit quality of the mortgages.
The credit enhancement for the senior certificates is 3.5%, which is lower than the best jumbo adjustable-rate 30-year loan pools, and even the best jumbo fixed-rate 30-year pools. The loans were originated to wealthy borrowers by The Boston Company. The driving force behind the credit support, according to Westerback, is the exceptionally strong credit quality of the borrowers. One of the indications of the borrowers' high credit quality is in their high FICO (credit) scores, which are significantly better than the best jumbo pools. In addition, most of the borrowers have significant financial resources, including both liquid and non-liquid assets. For these wealthy borrowers, the potential rate shock on the adjustable-rate loans is considered minimal. The excellence historical performance of the company's loans is consistent with this assessment.
Another positive feature is that the weighted-average loan-to-value ratio (LTV) of the loans in the pool (70%) is lower than a typical jumbo loan pool. However, the lower LTV roughly offsets the risks arising from having very expensive properties, many of which are second homes, that are likely to exhibit greater price volatility. In a bad economy, there may be fewer buyers for these luxury properties and the second homes (22%) may lose value even more quickly.
THE RATING ACTION
Issuer: Mellon Residential Funding Corporation
Originator and Servicer: Boston Safe Deposit and Trust Company (The Boston Company)
Securities: Mortgage Pass-Through Certificates, Series 2000-TBC2
Class A-1 Certificates, Adjustable, $501.624 million, rated Aaa
Class X Certificates, Variable, Notional, rated Aaa
Class B-1 Certificates, Variable, $6.497 million, rated Aa2
Class B-2 Certificates, Variable, $3.898 million, rated A2
Class B-3 Certificates, Variable, $2.859 million, rated Baa2
Class B-4 Certificates, Variable, $1.560 million, rated Ba2
Class B-5 Certificates, Variable, $1.560 million, rated B2
SERVICING
The Boston Company is the originator and servicer of the loans. The company is a capable and experienced servicer of super jumbo mortgage loans. The Boston Company currently services $5.8B of jumbo loans, of which only 0.13% is 60 + days delinquent or real estate owned.
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