Fitch Ratings Lowers 2 & Affirms 1 RMBS Class from MERIT 11

Business Wire, April 3, 2006

NEW YORK -- Fitch has taken the following rating actions on the MERIT Securities Corporation (MERIT) RMBS issue listed below:

Series 11

--Class 3A-1 downgraded to 'AA' from 'AAA';

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

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

The collateral in the aforementioned transaction consists of conventional, one- to four-family fully amortizing first lien mortgage loans and manufactured housing (MH) installment sales contracts. The MH portion of the pool was originated by Dynex Financial and is currently serviced by Origen Financial. The non-MH portion of the pool was originated and is currently serviced by various entities. As of the March 2006 distribution date, MERIT series 11 transaction is 94 months seasoned, and the pool factor (current mortgage loan principal outstanding as a percentage of the initial pool) is approximately 11%.

The affirmation of class B-3 reflects a satisfactory relationship between credit enhancement (CE) and future loss expectations and affects approximately $20 million of outstanding certificates. Prior to this rating action, class B-3 has already been downgraded to 'B' from 'BBB' (its initial rating) in February 2005.

The negative rating actions, which affect approximately $150.7 million of outstanding certificates, reflect continued deterioration in the relationship between CE and future loss expectations. Due to the level of losses incurred, CE in the form of overcollateralization (OC) has declined by approximately $1.08 million in the past six months. As of the March 2006 distribution date, the OC amount for series 11 is $5,068,896 (or 2.88% of collateral balance). Approximately 2.93% of the remaining pool balance is more than 60 days delinquent (including all bankruptcies, foreclosures and real estate-owned (REO)).

Additionally, a key to the poor performance of the collateral is the high percentage of MH loans remaining in the pool. MH loans typically experience a higher rate of default and higher loss severities on liquidated loans. At issuance, the collateral consisted of approximately 14% MH units. As of the March 2006 distribution date, the collateral is comprised of approximately 80% MH units.

Fitch will continue to closely monitor this transaction. 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.