UPDATE 1-DBRS cuts $15.4 bln mostly subprime RMBS

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NEW YORK May 30 (Reuters) - Credit agency DBRS cut the ratings on $15.4 billion of residential mortgage-backed securities on Friday, citing the significant increase in serious delinquencies relative to available credit support for the securities.

DBRS cut the ratings on 562 classes from 144 RMBS transactions that were backed by first-lien mortgages, while downgrading another 68 RMBS classes backed by second-lien collateral, it said. For the complete list see [ID:N30364841].

"Given the level of serious delinquencies in the current pipeline and corresponding potential for significant future losses, excess spread is not expected to be sufficient to cover anticipated losses," DBRS said in a report. "Consequently, the principal balance of subordinate classes may suffer principal writedowns," it said.

The rating agency said 90 percent of the downgrades were to first-lien subprime mortgages, while the balance of cuts comprised second-lien subprime loans and Alt-A mortgages.

DBRS said its cuts to the 68 second-lien RMBS classes was also triggered by the rapid deterioration in credit enhancement amid increasing loan delinquencies and losses.

"Overcollateralization has been depleted in many transactions and excess spread continues to diminish," said DBRS. "Additionally, in many cases, subordinate classes have already been impaired, further weakening the available credit support for the remaining senior and mezzanine classes."