Meritage MBS Classes Downgraded

Seven classes from two Meritage Mortgage Loan Trust securitizations have been downgraded by Fitch Ratings, and two other classes have been placed on Rating Watch Negative.The downgrades were as follows: series 2004-1, class M-6, from BBB-plus to BBB, class M-7, from BBB to BB-plus, class M-8, from BB-minus to B, and class B-1, from B-plus to C (and assigned a Distressed Recovery rating of DR4); and series 2004-2, class M-8, from BBB-plus to BB-plus, class M-9, from BBB to BB, and class M-10, from BB-plus to B-plus. The securities placed on Rating Watch Negative were classes M-6 and M-7 of series 2004-2. Fitch said the negative rating actions were due to a deterioration in the relationship between credit enhancement to expected losses.