Defaults on loans in commercial mortgage-backed securities declined last year for the second year in a row, according to an annual study by Fitch Ratings.The rating agency reported that 317 CMBS loans totaling $1.86 billion defaulted in 2005, down from 324 loans totaling $2.16 billion in 2004. Fitch said it expects CMBS loan defaults to rise, however, because the composition of mortgage pools is becoming more heavily weighted with hotels. "Although commercial property markets generally are improving, the impact of a future market downturn on CMBS could be greater due to an increased exposure to the volatile hotel sector," said Patty Bach, a Fitch senior director. Fitch can be found online at http://www.fitchratings.com.

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