Aames-Backed Classes Downgraded

Eight tranches in six securitizations backed by Aames collateral (and issued by Aames or Morgan Stanley) have been downgraded by Moody's Investors Service, and two others have been placed on review for possible downgrade.The downgrades from Aames Mortgage Trust were as follows: series 2001-3, class M-2, from Ba3 to B2, and class B, from B3 to Caa3; and series 2002-1, class M-2, from A2 to Baa1, and class B, from Baa2 to B1. The downgrades from Morgan Stanley Dean Witter Capital I Inc. Trust were as follows: series 2002-AM1, class B-1, from Baa3 to Ba2; series 2002-AM2, class B-1, from Baa3 to B2; series 2002-AM3, class B-2, from Baa3 to B1; and series 2002-HE2, class B-2, from Baa3 to Ba3. Classes on review for possible downgrade are class M-1 of Aames Mortgage Trust 2001-3 and class B-1 of Morgan Stanley Dean Witter Capital I Inc. Trust 2002-HE2. In addition, Moody's upgraded one tranche from the Aames 2002-2 transaction. The negative rating actions were attributed to higher-than-expected severities on liquidated loans and an accelerating pace of losses, with an accompanying deterioration of credit enhancement. The collateral consists of subprime residential mortgage loans.