by Calculated Risk on 10/22/2007 12:44:00 AM

From the NY Times: Mortgage Security Bondholders Facing a Cutoff of Interest Payments

Collateralized debt obligations ... are starting to shut off cash payments to investors in lower-rated bonds as credit-rating agencies downgrade the securities they own ...

Cutting off the cash flow, which is governed by rules and mathematical formulas that vary by security, is expected to accelerate in the months ahead.
...
With such a re-evaluation, owners of collateralized debt obligations ... may be forced to write down mortgage investments beyond the billions they have already written off. Some bonds, for example, may go from being valued at, say, 70 cents on the dollar to becoming largely worthless overnight, bankers and analysts say.

There is more in the article by Vikas Bajaj. The article suggests there is more pain coming for investors in certain CDOs.