Moody's Eyes Meritage B&C Classes

Seven subprime certificates from Meritage Mortgage Loan Trust 2004-1 and 2004-2 have been placed under review for possible downgrade by Moody's Investors Service.The affected classes are as follows: series 2004-1, classes M-4, M-5, M-6, M-7, and M-8; and series 2004-2, classes M-9 and M-10. The rating actions were taken because "credit enhancement provided by subordination, overcollateralization, and excess spread for each deal is low compared to the projected pipeline losses of the underlying pool," Moody's said. Both transactions are backed by first- and second-lien fixed- and adjustable-rate subprime mortgage loans originated by Meritage Mortgage Corp.