Homestar MBS Classes Downgraded

Two classes of Homestar Mortgage Acceptance Corp. asset-backed pass-through certificates, series 2004-2, have been downgraded by Moody's Investors Service, and one class from series 2004-3 has been placed on watch for possible downgrade.Class M-4 of series 2004-2 was downgraded from Baa1 to Baa3, and class M-5 was downgraded from Baa2 to B1. Class M-5 of series 2004-3 was placed on watch for possible downgrade. The rating actions were based on deteriorating credit enhancement, Moody's said. "While the collateral is performing better than expected, the overcollateralization has been falling significantly below its target as a result of lower-than-expected excess spread levels," the rating agency said. The deals are backed by Homestar-originated collateral consisting primarily of alternative-A loans, with a small percentage of subprime loans. Moody's can be found online at http://www.moodys.com.