DEC 24, 2013 1:39pm ET

Moody's Downgrades Vintage B of A Prime Jumbo RMBS

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Moody's Investors Service has downgraded six tranches backed by prime jumbo RMBS loans, issued by Bank of America.

The rating action of B of A’s Funding 2006-6 Trust, Mortgage Pass-Through Certificates 2006-6 follows another downgrade reported in April.

Class 1-A-10, downgraded to Caa1 after the April 11 downgrade to B3; Class 1-A-11, downgraded to Caa2 from Caa1; Class 1-A-24, downgraded to Caa2 from Caa1; and Class 30-IO, downgraded to Caa1 from B3.

Also, B of A’s Mortgage Pass-Through Certificates, Series 2005-12 Class A-7 and Class 30-IO were downgraded to Caa1 (sf) after being downgraded to B2 (sf) on Apr 11.

Moody's loss expectations on these pools have increased due to exposure to “high macroeconomic uncertainty, and in particular the unemployment rate,” analysts wrote. Despite a recent decline in the unemployment rate from 7.8% in November 2012 to 7% in November 2013, Moody's expect the unemployment central range to fluctuate between 6.5% and 7.5% in 2014.

House prices, “another key driver of US RMBS performance,” will to continue to rise in 2014, “but at lower increases” than previously expected and potentially leading to decreases.

“The performance of RMBS continues to remain highly dependent on servicer procedures,” analysts note. “Any change resulting from servicing transfers or other policy or regulatory change can impact the performance of these transactions.”

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