Merrill MBS Classes Downgraded

Two classes of Merrill Lynch Mortgage Investors mortgage-backed securities have been downgraded by Fitch Ratings.Class BF-1 of MLMI series 2002-AFC1 group 1 was downgraded from BBB to BB, and class BV-1 of group 2 of the same series was downgraded from BBB to BBB-minus. In addition, Fitch upgraded one class in the transaction and affirmed the ratings on four classes. Losses have exceeded excess spread in 11 of the last 12 months for group 1 and eight of the last 12 months for group 2, preventing the overcollateralization from maintaining its target amount, according to the rating agency. The deal's performance triggers have failed since the stepdown date and locked out the subordinate bonds from principal cash flow. Fitch said it expects the performance triggers to fail for the remainder of the deal's life. Group 1 is collateralized by fixed-rate mortgages, group 2 by adjustable-rate mortgages. The loans were initially originated or acquired by Superior Bank and later sold to Merrill Lynch.