Fitch Downgrades 4 & Affirms 10 of 5 Ocwen Residential MBS Issues

Business Wire, Oct 8, 2004

NEW YORK -- Fitch Ratings has taken the following rating actions on four Ocwen Residential MBS Corp. issues:

Ocwen Residential MBS Corp. mortgage pass-through certificates, series 1998-R1

--Class A affirmed at 'AAA';

--Class B-1 affirmed at 'AA';

--Class B-2 affirmed at 'A';

--Class B-3 downgraded to 'BBB-' from 'BBB'.

Ocwen Residential MBS Corp. mortgage pass-through certificates, series 1998-R2

--Class AF- AA affirmed at 'AAA' .

Ocwen Mortgage loan asset backed certificates, series 1998-OFS1

--Class A affirmed at 'AAA';

--Class M-1 affirmed at 'AA ';

--Class M-2 affirmed at 'A';

--Class B downgraded to 'BBB-' from 'BBB' and removed from Rating Watch Negative.

Ocwen Mortgage loan asset backed certificates, series 1998-OFS4

--Class B affirmed at 'BBB-'.

Ocwen Residential MBS Corp. mortgage pass-through certificates, series 1999-R2

--Class A affirmed at 'AAA';

--Class B-1 affirmed at 'AA';

--Class B-2 downgraded to 'BBB' from 'A';

--Class B-3 downgraded to 'CCC' from 'B'.

The affirmations, affecting $167,024,044 of debt, reflect credit enhancement consistent with future loss expectations. The negative rating actions are the result of poor collateral performance and the deterioration of asset quality beyond original expectations and affect $35,567,889 of outstanding certificates.

The series 1998-R1 transaction is collateralized by fixed-rate and adjustable-rate, first lien seasoned mortgage loans. All of the mortgage loans that have defaulted in the past are now considered reperforming loans. The current pool factor (current mortgage loans outstanding as a percentage of the initial pool) is 27%. The mortgage pool is currently 77 months seasoned. As of the August 2004 distribution, there are 2,314 mortgage loans remaining, 940 loans of which are in the delinquency buckets. The 90 plus delinquencies represent 27.7% of the mortgage pool, and foreclosures and REO represent 3.97% and 1.48%, respectively.

The mortgage assets of the 1998-R2 transaction consist of fixed- and adjustable-rate mortgage loans. All the mortgage loans that have defaulted in the past are now considered reperforming loans. Fitch only rated class A at 'AAA'. The current pool factor is 19%. There are 299 mortgage loans remaining. As of the August 2004 distribution, the nonrated (NR) subordinate bonds consist of classes B-1 through B-6 with total outstanding certificates balance of $14,265,400. The class A current certificate balance is $9,042,674.

The series 1998-OFS1 transaction is backed by fixed-rate and adjustable-rate mortgage loans. The mortgage pool supporting the trust is substantially paid down, with the current pool factor at 5.57%. The high level of losses incurred has resulted in the decline of overcollateralization (OC) to approximately $1,085,917, or 12.31% of the collateral balance, as of the August 2004 distribution date. Monthly excess spread generated within the transaction is generally decreasing over time. As of the August distribution, monthly excess spread was approximately $57,064. The three-month and six-month average monthly loss is approximately $95,087 and $90,583, respectively. The 90 plus delinquencies represent 36.38% of the mortgage pool; foreclosures and REO represent 8.34% and 9.3%, respectively.

The series 1998-OFS4 transaction is backed by fixed-rate and adjustable-rate mortgage loans. The mortgage pool supporting the trust is substantially paid down, with the current pool factor at 9.22%. Fitch only rated class B at 'BBB-'. Class B benefits from monthly excess interest and 12.59% enhancement (originally 2.25%) in the form of overcollateralization. The monthly excess interest was $174,114 in August 2004, and the monthly losses have averaged $197,811 over the past six months.

The series 1999-R2 transaction is collateralized by fixed-rate seasoned mortgage loans. Substantially all of the mortgage loans have defaulted in the past and are reperforming mortgage loans. The current pool factor is 28%. As of the August 2004 distribution, the current pool balance is $33,249,012. The mortgage pool is currently 68 months seasoned. There are 491 mortgage loans remaining, 481 loans of which are in the delinquency buckets. The 90 plus delinquencies represent 72.05% of the mortgage pool, foreclosures and REO represent 4.53% and 1.86%, respectively.

The mortgage loans in the above transactions with the exception of series 1998-OFS1 and 1998-OFS4 were acquired from the U.S. Department of Housing and Urban Development (HUD) and are reperforming mortgage loans. The goal of HUD was to make mortgage credit readily available to American home buyers, particularly those with low or moderate income.

The mortgage loans are being serviced by Litton Loan Servicing, LP (Litton). Litton, a subsidiary of Credit Based Asset Servicing and Securitization LLC (CBASS) is rated 'RPS1' for subprime and high loan to value (HLTV) products and 'RSS1' as special servicer by Fitch.

Fitch will continue to closely monitor this deal.

Further information regarding delinquencies, losses, and credit enhancement is available on the Fitch Ratings web site at 'www.fitchratings.com'.