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By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

 

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2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

 

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Rating Action:

Moodys's places six subprime RMBS on review for possible downgrade due to Ocwen's Acquisition of Litton Loan Servicing

08 Jul 2011

New York, July 08, 2011 -- Moody's Investors Service has placed 5 tranches from three subprime RMBS transactions on review for possible downgrade. These tranches may be affected by cash flow disruptions in the coming months post a servicing transfer to Ocwen Financial Corp from Litton Loan Servicing LP. In addition, Moody's has downgraded one tranche from GSAMP 2007-H1. This tranche is being placed on review for further downgrade due to the servicing transfer. The collateral backing these deals primarily consists of first-lien adjustable-rate subprime residential mortgages

RATINGS RATIONALE

Three tranches affected by today's actions are short cash flow tranches where full receipt of principal is dependent on the timing of losses and principal payments in the related transactions. The short cash flow tranches currently are first in line to receive all principal allocation from their related collateral groups. However, once their supporting mezzanine tranches are fully written down due to collateral losses, the short cash flow tranches will pay pro rata with other outstanding senior tranches in their respective deals. Therefore, if the short cash flow tranches are not paid off by the time of mezzanine write down, they will likely experience principal losses.

The purchase could temporarily disrupt RMBS cash flows because Ocwen may pursue both more loan modifications and tighter advances on delinquent loans than Litton has. A tighter advancing policy in this case means that Ocwen may deem as non-recoverable the advances made in the past by Litton and will seek to reimburse itself with funds from the top of the transaction waterfall. Any collections that go toward reimbursing advances delay payments to bondholders.

An increase in modifications, in addition to delaying the collection of liquidation proceeds to a later date, would itself increase the reimbursement of advances because the servicer will begin to recoup advances upon modification. Ocwen over the past several years has pursued modifications more rapidly than Litton has, indicating that a decrease in liquidations of Litton's loans would follow the acquisition.

Three other tranches issued by Ownit Mortgage Loan Trust 2005-4 and currently rated Aaa(sf) are being placed on review due to potential interest shortfalls if cash flows are disrupted.

The primary source of assumption uncertainty is the rate of realized losses reducing the balance of the mezzanine certificates, and the cash flow disruptions affecting the amount of principal that would normally be used to pay off the principal balance of these short cash flow tranches.

The principal methodology used in these ratings is described in the Monitoring and Performance Review section in "Moody's Approach to Rating US Residential Mortgage-Backed Securities" published in December 2008. Other factors used in these ratings are described in "Moody's Approach to Rating Structured Finance Securities in Default" published in November 2009. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

Complete rating actions are as follows:

Issuer: Fremont Home Loan Trust 2006-2

Cl. II-A-2, A2 (sf) Placed Under Review for Possible Downgrade; previously on Apr 29, 2010 Confirmed at A2 (sf)

Issuer: GSAMP Trust 2006-HE3

Cl. A-2B, Aa2 (sf) Placed Under Review for Possible Downgrade; previously on Jun 21, 2010 Confirmed at Aa2 (sf)

Issuer: GSAMP Trust 2007-H1

Cl. A-1A, Downgraded to Ba1 (sf) and Placed Under Review for Possible Downgrade; previously on Sep 17, 2010 Confirmed at A2 (sf)

Issuer: Ownit Mortgage Loan Trust 2005-4

Cl. A-1, Aaa (sf) Placed Under Review for Possible Downgrade; previously on Aug 5, 2010 Confirmed at Aaa (sf)

Cl. A-2A2, Aaa (sf) Placed Under Review for Possible Downgrade; previously on Aug 5, 2010 Confirmed at Aaa (sf)

Cl. A-2B, Aaa (sf) Placed Under Review for Possible Downgrade; previously on Aug 5, 2010 Confirmed at Aaa (sf)

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

Excel:http://www.moodys.com/viewresearchdoc.aspx?docid=PBS_SF254614

For more information please see www.moodys.com.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides relevant 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 relevant 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 relevant 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.

Information sources used to prepare the credit rating are the following: parties involved in the ratings, parties not involved in the ratings, public information, confidential and proprietary Moody's Investors Service information, and confidential and proprietary Moody's Analytics information.

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 this transaction in the past six months.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a 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 Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

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

The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's 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 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.

New York
Qiuzi Huang
Associate Analyst
Structured Finance Group
Moody's Investors Service, Inc.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Amita Shrivastava
VP - Senior Credit Officer
Structured Finance Group
Moody's Investors Service, Inc.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

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

Moodys's places six subprime RMBS on review for possible downgrade due to Ocwen's Acquisition of Litton Loan Servicing
No Related Data.
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