Thirty-eight tranches of synthetic residential mortgage-backed securities certificates from 12 transactions issued by RESI, EASI, SASI, and RESIX have been downgraded by Moody's Investors Service. The certificates are protected by subordination, including a nonamortizing unrated tranche. In a synthetic transaction, credit protection is provided to the owner of a pool of jumbo mortgages (the protected party) similar to that provided by subordination in conventional RMBS transactions, Moody's said. The reference portfolio includes prime fixed-rate mortgages from various originators. Under an agreement with the issuer, the protected party pays a fee for the transfer of a portion of the portfolio risk, the rating agency said.
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