(The following statement was released by the ratings agency)-
LONDON, Jan 24 - Moody's Investors Service has assigned a Aaa rating to the Class A certificates of GMAC-RFC's RAMP 2002-RS7, a securitization of residential fixed-rate mortgage loans. The certificates are insured by a certificate guaranty insurance policy from Ambac Assurance Corporation (Ambac), whose insurance financial strength is rated Aaa by Moody's. The rating on the certificates is based primarily on the Ambac policy, according to Moody's analysts.
Ambac receives some protection against losses through a combination of excess spread and overcollateralization. Based on these features, Moody's concluded that the risk to Ambac from insuring the certificates is "investment grade." The underlying loan pool consists of residential fixed-rate mortgage (FRM) loans acquired under GMAC-RFC's Negotiated Conduit Asset (NCA) Program.
The program is designed for loans that do not comply with some of the criteria used in standard programs, such as Jumbo-A, Expanded Criteria (Alt-A), AlterNet (subprime), and Home Solution, which is prime-quality, first-lien, high loan-to-value (LTV) program. Loans are "exceptions" to standard programs because they have higher LTV ratios, higher debt-to-income (DTI) ratios, lower credit scores, missing documentation or lack of mortgage insurance.
The credit quality of the GMAC-RFC's NCA pools is usually determined by the relative concentrations of the programs' exceptions. The transaction's loan pool consists predominantly of the Alt-A exceptions (75.48%) followed by the subprime exceptions (10.60%), the Jumbo-A exceptions (8.22%) and the Home Solution exceptions (5.69%). The overall credit quality is comparable to that of a weak Alt-A loan pool.
The loans' weighted-average credit score of 678 is about 45 points lower than that in GMAC-RFC's 30-year Alt-A pools; the weighted-average LTV ratio of 86.14% is about 10% higher. The loans' credit quality, however, is significantly better compared to that of a typical subprime FRM loan pool.
Substantially higher credit scores (65 to 70 points difference), a lack of second-lien loans along with a high concentration of purchase-money loans (63.44%) more than compensate for the risk associated with the higher LTV ratios. (The pool's weighted-average LTV ratio is about 6-7 point higher than that of a subprime FRM pool.)
In addition, the pool benefits from a favorable geographic diversification of loans. The largest state concentrations in Florida, Illinois and California amount to only 14.05%, 11.06% and 9.72% of the pool, respectively. The complete rating action is as follows: Issuer: RAMP Series 2002-RS7 Trust Securities: Mortgage Asset-Backed Pass-Through Certificates, Series 2002-RS7 Class A-1 4.407% $300,000,000 rated Aaa Class A-IO 2.000% Interest Only rated Aaa RFC, the transaction's master servicer, is rated SQ1, Moody's top master servicer rating. HomeComings Financial Network, Inc., a wholly owned subsidiary of GMAC-RFC, is the primary servicer for about 96.25% of the loans. HomeComings is a highly capable servicer of residential mortgage loans and has Moody's ratings of SQ1 and SQ2 in the primary servicer and the special servicer categories respectively.