First Franklin MBS Classes Downgraded

Nine classes from four First Franklin Financial Corp. residential mortgage-backed security transactions have been downgraded by Fitch Ratings.The downgrades were as follows: series 2004-FFH1, class M-7, from BBB-plus to BB-plus, class M-8, from BB to B-plus, and class M-9, from BB-minus to C/DR4; series 2004-FFH2, class B-1, from BB-plus to B-plus, and class B-2, from BB to CC/DR2; series 2004-FFH3, class M-9, from BBB-minus to BB-minus, and class B-1, from BB-plus to B-plus; and series 2004-FFH4, class M-11, from BBB-minus to BB-minus, and class B-1, from BB to B-plus. In addition, six classes from the same four deals were placed on Rating Watch Negative, and the ratings on nearly 100 classes from eight deals were affirmed. The downgrades were attributed primarily to losses that have exceeded excess spread for at least seven of the past nine months, eroding the over-collateralization. The collateral for the transactions consists of subprime mortgage loans secured by first liens on residential properties.