Moody's Investors Service has announced downgrades on 691 vintage 2006 securities (with original face value of $19.4 billion) backed by subprime closed-end second lien mortgage loans.Moody's said the Aug. 16 rating actions affect securities representing 76% of the dollar volume and 84% of the securities rated by Moody's in 2006 that were backed by subprime closed-end second-lien loans. An additional 14 classes were placed on review for possible downgrade. "The actions reflect the extremely poor performance of closed-end second-lien subprime mortgage loans securitized in 2006," the rating agency said. "These loans are defaulting at a rate materially higher than original expectations. Aggressive underwriting combined with prolonged, slowing home price appreciation has caused significant loan performance deterioration and is the primary factor in the negative rating actions."

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