The servicing subsidiary of Lehman Brothers Holdings Inc. has seen its servicer rating cut as a result of Lehman's bankruptcy today.

Moody's Investors Service has downgraded the servicer quality rating of Aurora Loan Services, a statement today said. Aurora is a subsidiary of Lehman Brothers Bank, which is owned by Lehman Brothers Holdings.

The unit was established in 1997 through the acquisition of certain Harbourton Mortgage Corp. assets by Lehman.

On prime residential loans, Aurora's rating was downgraded to SQ3 from SQ2. Its rating on subprime loans was lowered to SQ4+ from SQ2.

Moody's rating scale ranges from SQ1 to SQ5, with SQ1 being the strongest. Ratings are further differentiated by a plus or minus sign.

"Moody's rating action follows announcement by Lehman that it was filing for Chapter 11 bankruptcy protection after its failure to reach a merger agreement with a stronger strategic partner," the ratings agency said. "Although Aurora has currently maintained servicing performance, Moody's believes that uncertainty remains with regards to stability of the servicing platform in the future."

Most of Aurora's $124.5 billion servicing portfolio as of Aug. 31 was comprised of prime and Alt-A loans.