Moody's Downgrades 120 Subprime RMBS Tranches.

NEW YORK -- There's more bad news for subprime lending as Moody's Investors Service here has issued downgrades on 120 securities originated in the second half of 2005 and backed by subprime, first-lien mortgage loans.

The actions follow a review of the securities rated in the second half of 2005 and affect securities with an original face value of over $1.5 billion, representing 0.7% of the dollar volume and 4.1% of the securities rated by Moody's in the second half of 2005 that were backed by subprime, first-lien loans.

The actions reflect the higher-than-anticipated delinquency rates of first-lien subprime mortgage loans securitized in the second half of 2005.

"These loans were originated in an environment of aggressive underwriting, although not to the same degree as the subprime loans originated in 2006, answered Moody's.

"Aggressive underwriting combined with the prolonged slowdown in the housing market has caused significant loan performance deterioration and is the primary factor in these rating actions," the company said in a prepared statement. Moody's has noted a persistent negative trend in severe delinquencies for first-lien subprime mortgage loans securitized in late 2005 and 2006.

The vast majority of these downgrades impacted securities originally rated Baa or lower. In ...