In a new report, Moody's notes that there has been a big increase in the number of subprime mortgage loans that are being modified. In previous research, Moody's has pointed out that lenders' apparent unwillingness to renegotiate resetting mortgage loans is likely to produce higher losses to subprime RMBS investors.

According to the latest research, entitled "Moody's subprime ARM loan modification update", the number of loans being renegotiated after hitting rate resets has jumped from 3.5% in December to 9.8% at the end of March.

But the bad news is that there has also been a big increase in the number of modified loans which then become delinquent. Moody's says that 42% of the loans that were modified in the first half of 2007 were 90+ days delinquent by the end of March this year.