Two classes of Fremont Home Loan Trust's residential mortgage-backed certificates, series 2002-1, have been downgraded by Fitch Ratings.Class M-3 was downgraded from BBB to BB, and class M-4 was downgraded from BBB-minus to BB-minus. Fitch also affirmed the ratings on two classes in the transaction. The downgrades were attributed to concerns about the adequacy of credit enhancement in view of loss expectations. "In May 2005, the transaction passed stepdown tests and allowed the credit enhancement to be lowered to new target amounts," the rating agency said. "The stepdown has allowed for a significant amount of principal allocation to the subordinate classes. However, in recent months, losses have increased relative to the available excess spread and have caused the overcollateralization amount to decline below the target amount."
