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Rating Action:

Moody's takes action on $125 million of RMBS resecuritized bonds issued by MASTR in 2005 and 2008

25 Mar 2011

New York, March 25, 2011 -- Moody's Investors Service has downgraded the ratings of two tranches and confirmed the rating of one tranche from two RMBS resecuritization deals issued by MASTR in 2005 and 2008.

Issuer: MASTR Resecuritization 2005-3CI

Cl. N-1, Downgraded to Caa3 (sf); previously on Mar 12, 2010 B3 (sf) Placed Under Review for Possible Downgrade

Issuer: MASTR Resecuritization Trust 2008-1

Cl. A-1, Confirmed at Caa1 (sf); previously on Jan 29, 2010 Caa1 (sf) Placed Under Review for Possible Downgrade

Cl. A-IO, Downgraded to Caa3 (sf); previously on Jan 29, 2010 Caa2 (sf) Placed Under Review for Possible Downgrade

RATINGS RATIONALE

The actions are a result of the bonds not having sufficient credit enhancement to maintain the current ratings when compared to the revised loss expectation on the pools of mortgages backing the underlying certificates.

The resecuritization MASTR 2008-1 is backed by four underlying certificates: Class A-1 issued by CWALT 2006-21CB, Class 1-A-4 issued by CWALT 2007-22, Class A-10 issued by RALI 2006-QS16, and Class 2-A-3 issued by CWALT 2007-1T1. The underlying certificates are backed primarily by first-lien, Alt-A residential mortgage loans. The class A-1 issued by MASTR 2008-1 is a senior class, supported by a subordinated bond class A-2, which receives principal payments after class A-1 but absorbs losses before class A-1. The class A-IO is an interest only bond whose notional amount is linked to the underlying certificate 1-A-4 issued by CWALT 2007-22.

The resecuritization MASTR 2005-3Cl is backed by four outstanding underlying certificates: Class 1-X-3, 3-X-3, and M-X issued by CWALT 2005-27 and Class M-X issued by CHL 2005-9. The underlying certificates are backed primarily by first-lien, Option-Arm residential mortgage loans. The underlying certificates are all interest only (IO) bonds. The class N-1 issued by MASTR 2005-3Cl is a senior class, supported by a subordinated bond class N-2, which receives principal payments after class N-1. Losses are not allocated to the resecuritized bonds.

Moody's ratings on the resecuritization certificates are based on:

(i) The updated expected loss on the pools of loans backing the underlying certificates and the updated ratings on the underlying certificates. Moody's current loss expectation on the Alt-A pools backing the MASTR 2008-1 underlying certificates and the current ratings of those underlying certificates can be found at http://www.moodys.com/page/viewresearchdoc.aspx?docid=PBS_SF198174. Moody's current loss expectation on the Option-Arm pools backing the MASTR 2005-3Cl underlying certificates and the current ratings of those underlying certificates can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_SF225686.

(ii) The credit enhancement available to the underlying certificates, and

(iii) The structure of the resecuritization transaction.

Moody's first updated its loss assumption on the underlying pools of mortgage loans (backing the underlying certificates) and then arrived at updated ratings on the underlying certificates. The ratings on the underlying certificates are based on expected recoveries on the bonds under ninety-six different combinations of six loss levels, four loss timing curves and four prepayment curves. The volatility in losses experienced by a tranche due to small increments in losses on the underlying mortgage pool is taken into consideration when assigning ratings. For details regarding Moody's approach to estimating losses on

Alt-A and Option-Arm pools, please refer to the methodology publications "Alt-A RMBS Loss Projections Update: 2010" and " Option ARM RMBS Loss Projection Update: March 2010" respectively, available on Moodys.com.

In order to determine the ratings of MASTR 2008-1 resecuritized bonds, losses on the underlying certificates were ascribed to the resecuritized classes, according to the structure of the resecuritized transaction. The losses on the resecuritized certificates are allocated "bottom up" with the subordinate class taking losses ahead of the senior class. Principal payments to the certificates are allocated sequentially, with the senior class being paid ahead of the subordinate class.

In order to determine the ratings of MASTR 2005-3Cl resecuritized bonds, interest payments from the underlying interest only certificates are allocated sequentially to the resecuritized bonds, with the senior class being paid ahead of the subordinate class. Losses are not allocated to the resecurtized bonds.

Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website. In addition, Moody's publishes a weekly summary of structured finance credit, ratings and methodologies, available to all registered users of our website, at www.moodys.com/SFQuickCheck.

The primary source of assumption uncertainty is the current macroeconomic environment, in which unemployment remains at high levels, and weakness persists in the housing market. Moody's notes an increasing potential for a double-dip recession, which could cause a further 20% decline in home prices (versus its baseline assumption of roughly 5% further decline). Overall, Moody's assumes a further 5% decline in home prices with stabilization in early 2011, accompanied by continued stress in national employment levels through that timeframe.

As part of the sensitivity analysis, we stressed the updated expected loss on the pool of loans backing the underlying certificates by an additional 10% and found that the implied ratings of the bonds do not change.

Moody's Investors Service received and took into account a third party due diligence report on the underlying assets or financial instruments in this transaction and the due diligence reports had neutral impact on the ratings.

A list of these actions including CUSIP identifiers may be found at:

http://v3.moodys.com/viewresearchdoc.aspx?docid=PBS_SF240067

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings, public information, confidential and proprietary Moody's Investors Service information, confidential and proprietary Moody's Analytics' information.

Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of maintaining a credit rating.

Moody's adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

New York
Jayesh Joseph
Associate Analyst
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Deepika Kothari
Vice President - Senior Analyst
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Investors Service
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's takes action on $125 million of RMBS resecuritized bonds issued by MASTR in 2005 and 2008
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