Fitch Affirms 8, Downgrades 1 RMBS From 2 Salomon Brothers Mortgage Securities VII Issues

Business Wire, Dec 22, 2005

NEW YORK -- Fitch has taken rating actions on the following Salomon Brothers Mortgage Securities (SBMS) VII, Inc., mortgage pass-through certificates:

Salomon Brothers Mortgage Securities VII, Inc., mortgage pass-through certificates, series 1997-HUD1

-- Class A affirmed at 'AAA';

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

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

-- Class B-3 affirmed at 'BBB';

-- Class B-4 downgraded to 'C' from 'CC'.

Salomon Brothers Mortgage Securities VII, Inc., mortgage pass-through certificates, series 1997-HUD2

-- Class A affirmed at 'AAA';

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

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

-- Class B-3 affirmed at 'BB'.

The transaction is collateralized by 20-30-year fixed-rate seasoned mortgage loans. Substantially all of the mortgage loans have defaulted in the past and are reperforming mortgage loans. The mortgage loans were acquired from the U.S. Department of Housing and Urban Development (HUD). The goal of HUD was to make mortgage credit readily available to American home buyers, particularly those with low or moderate income.

The affirmation reflects subordination and deal performance in line with expectations and affects approximately $90.98 million of outstanding certificates.

The negative rating action on series 1997-HUD1, class B-4 affects $5,301,185 of total certificates. The original credit enhancement of 8.24% for class B-4 provided by classes B-5 through B-6 certificates has been fully depleted. There are 1,093 mortgage loans remaining. The 90 plus delinquencies represent 15.46% of the mortgage pool and foreclosures and real estate owned (REO) represent 1.67% and 0.61%, respectively.

The mortgage loans are being serviced by Ocwen Financial Corp (Ocwen). Ocwen, is rated 'RSS2' as special servicer and 'RPS2' for subprime products by Fitch.

Further information regarding current delinquency, loss, and credit enhancement statistics is available on the Fitch Ratings web site at 'www.fitchratings.com'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.