Following up on a July 10 warning, Standard & Poor’s Ratings Services said Thursday it had downgraded $6.39 billion in mortgage-backed securities backed by subprime loans.

The ratings agency said the downgrades involve 562 classes of mortgage-backed securities (MBS), including the majority of the 612 classes placed on “CreditWatch” Tuesday for possible downgrade.

Of the 612 securities placed on CreditWatch Tuesday, 498 classes totaling $5.69 billion were downgraded Thursday, while 26 classes were left on CreditWatch. The ratings of 74 classes were affirmed and the securities removed from CreditWatch.

Standard & Poor’s also announced that it had downgraded 64 of 70 subprime MBS classes placed on CreditWatch before July 10, with a total value of $700.9 million.

A complete list of the affected classes was posted on the Standard & Poor’s Web site.

The $6.39 billion combined value of all 562 downgraded classes represents 1.13 percent of all first-lien subprime mortgage collateral rated by Standard & Poor’s between the fourth quarter of 2005 and the fourth quarter of 2006.

The ratings agency also said the 612 classes placed on CreditWatch Tuesday represented $7.35 billion in rated securities, not $12 billion as first reported.

Altogether, 30 classes remain on CreditWatch, some of which are pending appeals by their issuers because of the presence of mortgage insurance.

Moody’s Investors Service this week also downgraded 399 securities backed by first-lien subprime mortgage loans with an original face value of more than $5.2 billion.

About 60 percent of the securities were backed by loans originated by Fremont Investment & Loan, Long Beach Mortgage Co., New Century Mortgage Corp. and WMC Mortgage Corp., which have been performing below average other loans made in 2006, Moody’s said.

On Thursday, Fitch Ratings said it is weighing downgrades on 170 securities backed by subprime mortgages valued at $7.1 billion, and also 19 collateralized debt obligations (CDOs) due to their subprime exposure.

***

Send tips or a Letter to the Editor to matt@inman.com, or call (510) 658-9252, ext. 150.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Prepare for this fall with top agents & brokers at Connect Now this Tuesday.GET YOUR TICKET×
Limited time: Get 30 days of Inman Select for $5.SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription