First Franklin 2nd-Lien MBS Downgraded

Twenty-eight certificates from three transactions issued by First Franklin Mortgage Loan Trust and backed by second-lien loans have been downgraded by Moody's Investors Service. Nine of the downgraded classes remain on review for possible further downgrade. The downgrades were attributed to credit enhancement levels that are too low in view of projected losses, and they take into account the worsening performance of transactions backed by closed-end second-lien collateral. "Substantial pool losses of over the last few months have eroded credit enhancement available to the mezzanine and senior certificates," the rating agency said. "Despite the large amount of write-offs due to losses, delinquency pipelines have remained high as borrowers continue to default."