164 Conseco/Green Tree MH Classes Downgraded

Fitch Ratings has downgraded 164 classes in 57 Conseco Finance/Green Tree Finance manufactured housing transactions.Fitch also affirmed its ratings on 117 classes in the 57 deals. The rating agency said the downgrades reflect the poor performance of the MH pools. Since CFC's Chapter 11 bankruptcy filing in December 2002, the company has continued to service its multibillion-dollar MH portfolio. Fitch said CFC's financial stress before and during the bankruptcy has affected the servicing operation by limiting capital and spurring high employee turnover. "As CFC has struggled to achieve the most appropriate method of servicing in a difficult environment, servicing practices have changed numerous times," Fitch said. ".... These changes have led to considerable volatility in performance." In June 2003, CFC's MH platform was sold to CFN Investment Holdings. "Although the sale has provided new capital, the degree of servicing stabilization remains to be seen," Fitch said, adding that some changes in servicing practices have only recently been implemented. Liquidation rates had slowed before the bankruptcy filing, causing CFC's repossession inventory to increase. "After the bankruptcy filing, the combination of the backlog of repossessed inventory and the exclusive reliance on the wholesale channel to rapidly liquidate the inventory resulted in a significant increase in liquidation rates and loss severities," Fitch said.