Two classes from Morgan Stanley ABS Capital I Inc., series 2002-HE3, have been downgraded by Moody's Investors Service.Class B-1 was downgraded from Baa2 to B1, and class B-2 was downgraded from Baa3 to B3. The downgrades were based on credit enhancement levels that are low in view of loss projections, Moody's said. "The overcollateralization amount is declining far below its required level due to the rising loss severities and realized losses," the rating agency said. The collateral consists of fixed- and adjustable-rate first-lien residential mortgage loans.

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