Bear Stearns Private Label RMBS Securitizations: Preliminary Information on the Effects of Hurricane Katrina

Business Wire, Sept 29, 2005

NEW YORK -- News reports detailing the devastation wrought by Hurricane Katrina across the southern US, particularly in Alabama, Louisiana and Mississippi, have touched us all. Hundreds of Americans have lost their lives, and countless others are without homes, power, and transportation. Bear, Stearns & Co. Inc. and EMC Mortgage Corporation are working together to make sure customers and investors are kept informed of the information available to them.

With respect to Bear Stearns private label RMBS outstanding securitizations from years 1999 through August, 2005, exposure to the affected counties totals approximately .37% and .37% for the prime jumbo and Alt-A sectors, respectively. In addition, exposure in Bear Stearns private label subprime (including scratch and dent) securitizations, totals 1.16%. A complete list of Bear Stearns private label prime jumbo, Alt-A and subprime (including scratch and dent) transactions and potential exposures on a deal-by-deal basis in the FEMA public and individual assistance counties, by percentage of outstanding principal balance is available upon request. The counties designated by FEMA as public and individual assistance were as of September 15, 2005, as set forth on FEMA's website www.fema.gov, and are subject to change subsequent to such date.

In addition, Bear Stearns is currently assessing the implications of Hurricane Rita to Bear Stearns RMBS and possible exposures to the newly affected counties of Louisiana and Texas.

EMC Mortgage Corporation (EMC) services a large number of loans in Bear Stearns private label residential mortgage transactions. Loans serviced by EMC are generally required to have hazard insurance as is customary in the area where the related mortgaged property is located with an insurer which is licensed to do business in such state. An insurance policy is required in an amount generally equal to the lesser of the outstanding principal balance of the mortgage loan or the maximum insurable value of the improvements securing such loan. In the event the homeowner does not provide sufficient evidence that hazard insurance is active on the property, EMC's policy is to secure lender placed hazard insurance on those loans at the same value as the borrower's last known policy.

In addition, where the property securing a loan is located, at the time of origination, in a federally designated flood area, EMC will cause flood insurance, to the extent available and in accordance with industry practices, to be maintained. Such flood insurance will generally be in an amount equal to the lesser of (i) the outstanding principal balance of the loan, (ii) either (a) the minimum amount required for loss on a replacement cost basis, or (b) the maximum insurable value of improvements, and (iii) the maximum amount of such insurance available for the property as required by federal programs. If it is necessary to order flood coverage through our lender placed program, it will be at the same value as the borrower's last known policy. Whether placed by EMC, or purchased by the borrower, flood insurance coverage is capped at $250,000.

EMC's lender placed insurance carrier for hazard and flood insurance are companies that are affiliated with Assurant Inc. Please note that, the availability and scope of insurance coverage relating to the affected loans will be subject to applicable deductibles and potential interpretive questions regarding covered losses that may take an extended period of time to be resolved. Given the uncertainties involved in the recovery efforts, no assurance can be given with respect to the performance or insurance coverage of the affected loans.

For information or to request details on a specific transaction, RMBS Investors should contact Cheryl Glory on (212) 272-1223 or at cglory@bear.com.