Six certificates from two ACE Securities Corp. Home Equity Loan Trust subprime mortgage deals have been downgraded by Moody's Investors Service.The downgrades were as follows: series 2002-HE1, class M-2, from A2 to Baa1, class M-3, from Baa2 to B1, and class M-4, from Baa3 to B3; and series 2004-HE1, class M-5, from Baa2 to Baa3, class M-6, from Baa3 to Ba2, and class B, from Ba2 to Caa2. The downgrades were attributed to the weaker-than-expected performance of the mortgage collateral and the resulting erosion of credit support. "In both of the transactions, overcollateralization amounts are currently below their targets, and pipeline losses are likely to cause eventual depletion of the overcollateralization and losses on the most subordinate tranches," Moody's said. In addition, credit enhancement levels may be low given the projected losses on the underlying pools, according to the rating agency. Moody's can be found online at http://www.moodys.com.
