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Moody's Revises Hybrid, ARM Analysis.

Mortgage Servicing News

| June 01, 2005 | COPYRIGHT 2005 SourceMedia, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan.  All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)Copyright

New York -- Moody's Investors Service is refining its loss coverage methodology for subprime hybrid adjustable-rate mortgages

The rating agency said it would apply this revised methodology to subprime securitization deals closing on or after April 15.

The changes are designed "to better account for the observed range in product features utilized in the marketplace, including differences in the interest rate caps and the degree of start rate discount embedded in the loan rate structure," Moody's said.

The rating agency is changing its methodology because its analysis of mortgage pools shows "that variations in these features, particularly under a rising interest rate environment, result in a substantially different level of payment shock to the borrowers, and thus varying mortgage loan performance expectations."

The rating agency said ...

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Source: HighBeam Research, Moody's Revises Hybrid, ARM Analysis.

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