Moody's Refines Subprime Analysis

Moody's Investors Service will expand and refine its analysis of subprime home loans slated for securitization starting July 1, and the changes will most affect stated-income loan programs and loans made to first-time homebuyers with little credit history.

Moody's said the new analysis reflects performance experience that has been recently accumulated.

The changes in the rating agency's analysis of subprime residential mortgages slated for securitization will start on July 1.

In addition to adding some new data, Moody's said it will modify the way some other factors are incorporated into its analysis. The rating agency said the changes reflect additional data that are being captured by loan originators as well as the recent performance of loans in the troubled subprime sector.

The changes include additional loan-level analysis of some data that were previously analyzed at the pool level, Moody's said. Changes regarding the analysis of stated-income borrowers and borrowers with little credit history also have been made. Other factors that have been changed include the number of open trade lines in a borrower's credit file, the limit of the largest trade line, the length of time the oldest trade line has been open, the amount of consumer debt in collection, self-employed status and the number of months from a bankruptcy disposition or foreclosure.

Moody's said that if data related to any of the new items are unavailable, it will make an assumption that incorporates the additional risk resulting from the increased uncertainty.

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