Moody's Investors Service has downgraded 399 securities that were issued in 2006 and backed primarily by first-lien subprime mortgage loans.Moody's also placed 32 other classes under review for possible downgrade. The actions, which affect securities with an original face value of over $5.2 billion, were based on higher-than-expected rates of delinquency in the underlying collateral, the rating agency said. First-lien subprime loans securitized in 2006 "were originated in an environment of aggressive underwriting," Moody's said. "This aggressive underwriting combined with prolonged, slowing home price appreciation has caused significant loan performance deterioration and is the primary factor in these rating actions." Moody's said about 60% of the rating actions affected transactions backed by collateral originated by Fremont Investment & Loan, Long Beach Mortgage Co., New Century Mortgage Corp., and WMC Mortgage Corp., which it said have been performing below the average of the 2006 vintage. Moody's can be found online at http://www.moodys.com.
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April 18