Dozens of tranches from over $6 billion in Alt-A and option-ARM residential mortgage-backed securities have been upgraded thanks to Bank of America Corp.’s massive settlement.
An $8.5 billion settlement between Bank of America, N.A., and RMBS trustee Bank of New York Mellon was originally reached in 2011 and approved by an appeals court last year.
The settlement with BofA, which acquired Countrywide Financial Corp. in July 2008, resolved Countrywide’s alleged breach of representations and warranties and shoddy servicing practices.
On Tuesday, Moody’s Investors Service reported that it upgraded 98 tranches from 46 RMBS issued by Countrywide Mortgage for $6.2 billion.
The upgrade reflects
$862 million in proceeds that went to the 46 transactions.
Moody’s noted that it actions consider the recent performance of the underlying pools and reflect its updated loss expectation on the pools along with changes in tranche level credit enhancement.
“The rating upgrades incorporate the positive effect of recoveries and the reduction of loss on the affected bonds as well as any increases in credit enhancement related to recoveries or otherwise on subordinated bonds,” Moody’s stated.
Another 219 tranches were affirmed.
“The rating confirmations primarily reflect losses incurred and outstanding on the bonds after settlement recoveries, Moody’s updated loss expectation on the bonds and related pools, and bond specific credit enhancement in the transactions,” Moody’s explained.
