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19 Apr 2004
MOODY'S RATES LONG BEACH 2004-1 SUB-PRIME MORTGAGE SECURITIZATION Aaa
Approximately $4.5 Billion of Mortgage-Backed Securities Rated
New York, April 19, 2004 -- Moody's Investors Service has assigned a rating of Aaa to the senior certificates
issued in Long Beach Mortgage Loan Trust, Series 2004-1,
securitization of hybrid adjustable-rate (70%) and fixed-rate
subprime residential mortgage loans (30%), originated by
Long Beach Mortgage Company (Long Beach). In addition, ratings
ranging from Aa1 to Ba2 were assigned to the mezzanine and subordinated
classes of certificates issued in the transaction. The ratings
on the certificates are based on the quality of the underlying mortgage
loans, subordination, available excess spread, and overcollateralization.
Navneet Agarwal, a Moody's analyst, said that the credit quality
of the Long Beach originated loans backing the transaction is above average
for the subprime mortgage market, and comparable to mortgage pools
backing Long Beach's recent transactions. Long Beach targets borrowers
with relatively strong credit scores and strong mortgage payment history.
The weighted-average FICO score of 643 for the obligors in this
pool is higher than in subprime transactions with similar hybrid adjustable
rate and fixed rate mortgage loan concentration.
In addition, Long Beach has a greater percentage of mortgage loans
for purchasing homes rather than cash outs or debt consolidations as compared
to most subprime pools. Purchase money mortgages comprised 46%
of this pool. This is a positive feature because the best indicator
of property market value is an arms-length sale to a third party.
Another salient point about this securitization is that unlike past Long
Beach deals, the pools backing these certificates have no second
lien loans and no manufactured housing loans.
The mortgage pool is split into group I and group II. The senior
Class A-1 and A-2 certificates represent interest in the
group I mortgage loans, while the senior Class A-3,
A-4 and A-5 certificates represent interest in group II
mortgage loans. The mezzanine and subordinate certificates represent
interest in both mortgage groups and provide support to all classes of
senior certificates. The principal balance of Class C certificates
represents over-collateralization for both groups, and is
fully funded at transaction closing. Within the Group 1 senior
certificates, A-1 and A-2, A-2 will take
losses before the class A-1 takes losses i.e. Class
A-1 is a super senior class and class A-2 is a senior-support
The mortgage pool will be sub-serviced by Washington Mutual Bank.
In April 2001, Washington Mutual, Inc., Long
Beach's parent, dismantled Long Beach's servicing platform and transferred
the existing servicing portfolio to Washington Mutual Bank. As
a result of the transfer, the performance of the subprime mortgage
pools originated and previously serviced by Long Beach deteriorated significantly.
Due to actions taken by Washington Mutual Bank to improve subprime servicing,
this deterioration in performance has abated. While serious delinquencies
on Long Beach pools remain high compared to performance prior to the servicing
transfer, Moody's believes this performance will improve over time.
Moody's incorporates the quality of the servicer into its rating analysis.
Long Beach is a specialty finance company engaged in the business of originating,
purchasing, and selling subprime mortgage loans. It originates
loans through a large network of mortgage brokers and re-underwrites
all loans prior to funding.
The complete rating actions are as follows:
Issuer: Long Beach Mortgage Loan Trust 2004-1
Securities: Asset Backed Certificates, Series 2004-1
Originator and Master Servicer: Long Beach Mortgage Company
Sub-Servicer: Washington Mutual Bank FA
Class A-1, $2,200,000,000,
Variable, rated Aaa
Class A-2, $220,000,000, Variable,
Class A-3, $1,011,070,000,
Variable, rated Aaa
Class A-4, $194,000,000, Variable,
Class A-5, $132,450,000, Variable,
Class M-1, $123,750,000, Variable,
Class M-2, $112,500,000, Variable,
Class M-3, $67,500,000, Variable,
Class M-4, $67,500,000, Variable,
Class M-5, $56,250,000, Variable,
Class M-6, $56,250,000, Variable,
Class M-7, $56,250,000, Variable,
Class M-8, $45,000,000, Variable,
Class M-9, $56,250,000, Variable,
Class B, $33,750,000, Variable, rated
Ba2 (Offered as a private placement under Sec. 144A.)
Additional research is available on http://moodys.com
Jay A. Siegel
Structured Finance Group
Moody's Investors Service
Structured Finance Group
Moody's Investors Service
No Related Data.
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