Fitch Affms 5 Of 2 Salomon Brothers Mortgage Sec VII Issues

Business Wire, Sept 22, 2004

NEW YORK -- Fitch Ratings has taken rating actions on the following Salomon Brothers Mortgage Securities VII, Inc. issues:

Salomon Brothers Mortgage Securities VII, Inc. Asset-Backed Floating Rate Securities, series 1997-NC5

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

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

Salomon Brothers Mortgage Securities VII, Inc. asset-backed floating rate securities, series 1999-AQ2

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

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

--Class M-3 affirmed at 'BBB'.

These affirmations reflect deal performance and credit enhancement levels consistent with expectations. Credit enhancement in these transactions is in the form of overcollateralization (OC). As of the Aug. 25, 2004 distribution date, the OC for the 1997-NC5 series, though not at the target level of $1,337,333, was adequate at $1,196,318.56 (14.24% of current collateral balance). For the 1999-AQ2 series, the OC was at the target level of $12, 799,900 (11.89% of current collateral balance) as of the Sept. 15, 2004 distribution date.

The average monthly losses have been $42,086 over the past 12 months for the 1997-NC5 series and the average monthly excess interest during the same period has been $62,939. The net monthly excess interest has averaged $20,852 over the past 12 months. For the 1999-AQ2 series, the average monthly losses have been $590,581 over the past 12 months and the average monthly excess interest during the same period has been $763,519. The net monthly excess interest has averaged $172,937 over the past 12 months.

The mortgage pools supporting the trusts are substantially paid down, with the current pool factor (current mortgage loans outstanding as a percentage of the initial pool) at 4.71% and 13.45%, respectively, for the 1997-NC5 and 1999-AQ2 series. Classes A and M-3 (for the 1997-NC5 series) and classes A-1 and A-2 (for the 1999-AQ2 series) have been fully retired.

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