20 GE Cap MBS Classes Downgraded

Twenty classes of mezzanine and subordinate bonds in six securitizations issued by GE Capital Mortgage Services Inc. from 1996 through 1999 have been downgraded by Moody's Investors Service.The affected transactions -- series 1996-HE3, 1997-HE2, 1997-HE3, 1997-HE4, 1998-HE1, and 1999-HE2 -- are securitizations of seasoned fixed-rate, first- and second-lien, subprime residential mortgage loans. Moody's attributed the downgrades to low credit enhancement levels, stemming from poor performance by the deals, compared with projected future losses. "The pool performance was originally expected to be stronger than an average subprime mortgage pool," the rating agency said. "However, the performance to date has been below expectations. As of the October 2002 reporting date, cumulative losses to date range from 1.50% for the 1998-HE1 transaction to 2.60% for the 1997-HE2 transaction." GE Capital Mortgage Services was the original master servicer for the transactions, but the company is no longer in the servicing business, Moody's noted. Wells Fargo Mortgage Minnesota NA has taken over the servicing. The rating agency can be found online at http://www.moodys.com.