Four classes of certificates in the Merit Securities Corp. series 12 manufactured housing deal have been downgraded by Moody's Investors Service.The downgrades were as follows: class 1-A-3, from Aaa to Baa2; class 1-M-1, from Aa2 to Ca; class 1-M-2, from A2 to C; and class 1-B, from Baa2 to C. Moody's said the rating actions were based on weaker-than-expected performance by the manufactured housing loans that make up the collateral pool. As of March, cumulative losses equaled 10.33%. "Because of the high cumulative losses and insufficient excess spread, overcollateralization in the transaction continues to erode," the rating agency said. Merit is a wholly owned subsidiary of Dynex Capital Inc., Glen Allen, Va. Moody's can be found online at http://www.moodys.com.

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