Moody's Reviewing Jumbo Mortgage Securities as Loan Defaults Soar

Los Angeles Times (08/28/08)
A rapid increase in late loan payments in recent months has prompted Moody's Investors Service to review all prime jumbo mortgage securities issued in 2006 and 2007. The New York ratings company says "serious delinquencies" for prime jumbo loans in securities shot up 72 percent from January to June, jumping from 1 percent of balances to 1.7 percent. "In contrast, subprime delinquencies, though much higher, rose 25 percent over the same period, increasing from 25.2 percent to 31.5 percent," Peter McNally, a Moody's analyst, wrote in a related report. Moody's projects that losses on home equity loans packaged into 2007 bonds will climb to 17 percent on average and losses will rise to 13 percent for 2006 bonds.