Moody's on Thursday put 7,942 tranches of subprime RMBS onreview for possible downgrade. The securities were originallyvalued at a total of $680 billion, but Moody's projects the lossesfor the RMBS at anywhere from 12% to 14% in the case of the '05bonds to 33% to 37% on those issued in '07. In a statement, theagency cites "continued deterioration in home prices, rising lossseverities on liquidated loans, persistent elevated default ratesand progressively diminishing prepayment rates throughout thesector."

Although the actions taken by Moody's on the securities willvary, "it is likely that the vast majority of mezzanine andsubordinate certificates currently rated B or above would bedowngraded to ratings of Caa or below, particularly for bondsissued in 2006 and 2007," according to the agency. "Given the levelof losses currently being projected, a majority of seniorcertificates will likely be downgraded below investment grade."

Earlier this week, Fitch expressed concern that changes to NewYork State's rent regulations could adversely affect several NewYork City-based large multifamily loans backing CMBS and result indowngrades. The state Senate is considering legislation to enactthe changes; the Assembly approved a bill earlier this month.

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.