Class B-2 of Morgan Stanley Dean Witter Capital I Inc. Trust series 2002-AM3 has been downgraded from B1 to Caa3 by Moody's Investors Service.The downgrade was attributed to credit enhancement levels that may be low given the projected losses on the underlying pools. "The transaction has taken significant losses, causing gradual erosion of the overcollateralization, and the most subordinate B-2 tranche is in danger of taking writedowns," Moody's said. The transaction is backed by first-lien adjustable- and fixed-rate mortgage loans originated by Aames Financial Corp.

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