Finance America MBS Classes Downgraded

Four certificates from two Finance America Mortgage Loan Trust securitizations issued in 2004 have been downgraded by Moody's Investors Service.The downgrades were as follows: series 2004-1, class M6, from A3 to Baa2, class M7, from Baa1 to Ba2, and class M8, from Baa2 to B3; and series 2004-2, class M-9, from Baa3 to Ba2. The downgrades were attributed to credit enhancement levels that may be low given the projected losses. "Both transactions have stepped down, causing the subordinated certificates to start receiving their share of unscheduled prepayments," Moody's reported. "In addition, the severity of loss on liquidated loans has begun to increase." The transactions are backed primarily by first-lien adjustable- and fixed-rate subprime mortgage loans.