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Fitch Affirms 8 & Downgrades 3 Classes from 2 EMC Mortgage Loan Trusts

26 Oct 2007 1:57 PM (EDT)


Fitch Ratings-New York-26 October 2007: Fitch Ratings has taken action on the following EMC Mortgage Loan Trust transactions:

Series 2001-A
--Class A affirmed at 'AAA';
--Class M-1 affirmed at 'AA';
--Class M-2 affirmed at 'A';
--Class B affirmed at 'BBB-'.

Series 2003-B
--Class A affirmed at 'AAA';
--Class M-1 affirmed at 'AA';
--Class M-2 downgraded to 'BBB+' from 'A';
--Class B downgraded 'B' from 'BBB'.

Series 2004-A
--Class A affirmed at 'AAA';
--Class M-1 affirmed at 'AA';
--Class M-2 downgraded to 'BBB+' from 'A';
--Class B downgraded to 'BB' from 'BBB'.

The aforementioned trusts consist of fixed rate and adjustable rate seasoned fixed rate, first and second liens secured primarily by one- to four-family residential properties, with the exception of a limited number of multifamily properties. The mortgage loans were acquired by EMC Mortgage Corporation from various institutions and include loans which had defaulted in the past and are re-performing or are performing under the provisions of a bankruptcy plan or a forbearance plan, or loans which are performing under the terms of the related original notes or such notes as modified.

The affirmations reflect adequate relationships of credit enhancement (CE) to future loss expectations and affect approximately $76.8 million of outstanding certificates. The classes with negative actions reflect the deterioration in the relationship of CE to future loss expectations and affects approximately $9.1 million of outstanding certificates.

Over the past year, there were several months in which the series 2003-B collateral losses exceeded excess spread resulting in a decrease in the overcollateralization (OC) amount.
The OC is also decreasing as a percentage which is putting negative pressure on the subordinate bonds.

While the OC of Series 2004-A is currently at the target amount, several months prior to step-down and two months after step-down OC was below the target amount. Fitch expects this trend in OC decline to continue.

The master servicer for this transaction, EMC Mortgage Corp., is a wholly owned subsidiary of The Bear Stearns Companies Inc. and is rated 'RPS1' for prime, Alt-A, and subprime products, rated 'RSS1' as a special servicer by Fitch, and rated 'RMS3' from master servicing.

Contact: Jack Lohrs 1-212-908-0290 or Vincent Barberio 1-212-908-0505, New York.

Media Relations: Sandro Scenga, New York, Tel: +1 212-908-0278.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 'www.fitchratings.com'. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

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