Moody's Investors Service Inc. cut its ratings Thursday on $1.5 billion of jumbo mortgage-backed securities issued by Thornburg Mortgage Inc. and Merrill Lynch & Co. earlier this decade.
The rating agency has been moving to cut ratings on numerous jumbo deals in recent weeks. It cut $7.4 billion earlier this week and $6.2 billion last week.
Jumbo loans, issued to homeowners needing at least $417,000 in financing, have seen a sharp rise in delinquencies, which have been rising faster than for other home loans on a month-to-month basis. However, the total delinquency rate remains sharply lower than those of other types of loans.
Thursday's downgrades were to 32 tranches from six Thornburg transactions totaling $925 million and 87 tranches from 14 Merrill Lynch deals totaling $576 million. Merrill Lynch is now part of Bank of America Corp.
Many of the tranches started out with a triple-A rating, and several of those with that highest rating were cut to the brink of junk territory.
Thornburg Mortgage filed for bankruptcy protection in April, saying it planned to liquidate its remaining assets and discontinue operations once they were sold.