New York, September 13, 2013 -- Moody's Investors Service has confirmed the ratings of eleven tranches
from eight transactions backed by Option ARM loans, issued by Residential
Accredit Loans, Inc.
Complete rating actions are as follows:
Issuer: RALI Series 2006-QO10 Trust
Cl. A-1, Confirmed at Caa3 (sf); previously on
May 14, 2013 Caa3 (sf) Placed Under Review Direction Uncertain
Issuer: RALI Series 2006-QO4 Trust
Cl. II-A-1, Confirmed at Caa3 (sf); previously
on May 14, 2013 Caa3 (sf) Placed Under Review Direction Uncertain
Issuer: RALI Series 2006-QO5 Trust
Cl. I-A-1, Confirmed at Caa3 (sf); previously
on May 14, 2013 Caa3 (sf) Placed Under Review Direction Uncertain
Cl. II-A-1, Confirmed at Caa3 (sf); previously
on May 14, 2013 Caa3 (sf) Placed Under Review Direction Uncertain
Cl. III-A-2, Confirmed at Caa3 (sf); previously
on May 14, 2013 Caa3 (sf) Placed Under Review Direction Uncertain
Issuer: RALI Series 2006-QO8 Trust
Cl. I-A2A, Confirmed at Caa3 (sf); previously
on May 14, 2013 Caa3 (sf) Placed Under Review Direction Uncertain
Issuer: RALI Series 2006-QO9 Trust
Cl. I-A2A, Confirmed at Caa3 (sf); previously
on May 14, 2013 Caa3 (sf) Placed Under Review Direction Uncertain
Issuer: RALI Series 2007-QO1 Trust
Cl. A-1, Confirmed at Caa3 (sf); previously on
May 14, 2013 Caa3 (sf) Placed Under Review Direction Uncertain
Issuer: RALI Series 2007-QO3 Trust
Cl. A-1, Confirmed at Caa3 (sf); previously on
May 14, 2013 Caa3 (sf) Placed Under Review Direction Uncertain
Issuer: RALI Series 2007-QO4 Trust
Cl. A-1-a, Confirmed at Caa3 (sf); previously
on May 14, 2013 Caa3 (sf) Placed Under Review Direction Uncertain
Cl. A-1, Confirmed at Caa3 (sf); previously on
May 14, 2013 Caa3 (sf) Placed Under Review Direction Uncertain
RATINGS RATIONALE
The actions reflect the correction of errors in the Structured Finance
Workstation (SFW) cash flow models used by Moody's in rating these transactions,
specifically in how the models handle interest allocation for these transactions.
The cash flow models used in past rating actions used a separate interest
waterfall. However, the pooling and servicing agreements
for these transactions provide that all collected principal and interest
is commingled into one payment waterfall to first pay all promised interest
due on bonds , and then pay scheduled principal. Due to the
discovery of these errors, eleven tranches were placed on watch
on May 14, 2013. The errors have now been corrected,
and today's rating actions reflect these changes.
The principal methodology used in these ratings was "US RMBS Surveillance
Methodology" published in June 2013. Please see the Credit
Policy page on www.moodys.com for a copy of this methodology.
The primary source of assumption uncertainty is the uncertainty in our
central macroeconomic forecast and performance volatility due to servicer-related
issues. The unemployment rate fell from 8.1% in August
2012 to 7.3% in August 2013. Moody's forecasts an
unemployment central range of 7.0% to 8.0%
for the 2013 year. Moody's expects house prices to continue to
rise in 2013. Performance of RMBS continues to remain highly dependent
on servicer procedures. Any change resulting from servicing transfers
or other policy or regulatory change can impact the performance of these
transactions.
A list of these actions including CUSIP identifiers may be found at:
Excel: http://www.moodys.com/viewresearchdoc.aspx?docid=PBS_SF341794
A list of updated estimated pool losses and sensitivity analysis is being
posted on an ongoing basis for the duration of this review period and
may be found at:
Option ARM
Excel: http://v3.moodys.com/page/viewresearchdoc.aspx?docid=PBS_SF225686
For more information please see www.moodys.com.
REGULATORY DISCLOSURES
Moody's did not receive or take into account a third party assessment
on the due diligence performed regarding the underlying assets or financial
instruments related to the monitoring of these transactions in the past
six months.
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides certain regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and
whose ratings may change as a result of this rating action, the
associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Samuel Ukrainsky
Associate Analyst
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Bruce D. Fabrikant
Senior Vice President
Structured Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's takes action on $1 Billion of Option ARM RMBS issued by RALI from 2006 to 2007