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Merit Deal Hit by MH

Five classes of senior and subordinate certificates of the Merit Securities Corp. Series 13 manufactured housing securitization are being reviewed for possible downgrade by Moody's Investors Service.

The affected securities are classes A3, A4, M1, M2 and B1.

Moody's said the review was prompted by weaker-than-anticipated performance by the manufactured housing loans in the collateral pool.

"Because of the high cumulative losses and insufficient excess spread, overcollateralization in the transaction has dropped from 10% to 3% of the original pool balance," the rating agency said.

Merit is a wholly owned subsidiary of Dynex Capital Inc., a financial services company based in Glen Allen, Va.

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