Alternative Performance Triggers May Provide Better Protection to Investors Holding Underperforming MBS
September 29, 2006
Certain alternative performance triggers might provide superior protection to investors in home-equity securitization deals that are performing below expectation, according to a new analysis by Moody’s Investors Service. Most home-equity deals feature two performance triggers to preserve credit enhancement: a cumulative loss trigger, which is activated if the losses on a collateral pool go beyond a certain level, and a delinquency trigger, which kicks in when serious delinquencies...