Moody's Investors Service says that a build up of excess credit support is benefiting subordinate certificates in home equity securitizations.The build up of excess credit support allows subordinate note holders to receive principal payments before more senior mezzanine certificates in some transactions, the rating agency said. The phenomena is the result of record high prepayment rates due to refinancing. This seeming anomaly is a by-product of a structural feature of most senior/subordinate home equity transactions, which releases excess credit support to the subordinate classes after a step-down date, Moody's said.
Processing Content
