Fitch Revises Outlooks to Negative for AH Mortgage Advance Trust 2010-ADV1 Notes

NEW YORK--(BUSINESS WIRE)-- Fitch Rating has affirmed and revised Rating Outlooks for the following classes of AH Mortgage Advance Trust 2010-ADV1, advance receivables backed notes, series 2010-ADV1:

--$150,000,000 class A VFN (00130XAC4) at 'AAAsf'; Outlook to Negative from Stable;

--$200,000,000 class A-1 term note (00130XAA8) at 'AAAsf'; Outlook to Negative from Stable;

--$50,000,000 class B-1 term note (00130XAB6) at 'BBBsf'; Outlook to Negative from Stable.

The review was triggered by Fitch's recent update of the 'U.S. Residential Mortgage Servicer Advance Receivables Securitization Rating Criteria', released Dec. 6, 2010 and available at 'www.fitchratings.com'. The core of Fitch's criteria on rating SART has not changed; however, additional stresses on the vectors have been added due to concerns on regulatory activities and servicers' operational constraints as Fitch expects that the liquidation process will slow down further.

The transaction was reviewed in accordance with the updated criteria, and both the senior and subordinate notes pass the stress levels required to be at their current rating levels. Fitch has revised the Outlooks for the notes to Negative due to concern that regulatory activities and serviciers' operational constraints may slow the recovery of advances to the transaction.

The notes are backed by the rights of AH Mortgage Servicing as servicer, to receive reimbursements of principal and interest (P&I) and servicing advances made on certain underlying transactions. The servicer is required to make advances in respect of mortgage loans serviced under designated servicing agreements for (1) scheduled payments of principal and interest that have not been timely paid by mortgagors (P&I Advances), (2) expenses associated with the preservation of a mortgaged property, including but not limited to property taxes, insurance premiums or other property-related expenses incurred in foreclosing upon, preserving and selling mortgage properties, including but not limited to attorney's and other professional fees and expenses incurred in connection with foreclosure and liquidation or other proceedings arising in the course of the mortgage loans (Corporate Advances), (3) tax and insurance escrow amounts required to be, but not, paid by a Mortgagor under the related mortgage loans (Escrow Advances).

The ratings primarily reflect the trust's first priority claim to the receivables as well as the discount factors of notes on the receivable value. The discount factors remain the same as when the transaction closed in August 2010. Additional rating considerations include an interest rate cap from Wells Fargo Bank, N.A. with a strike rate of 4.5%, a reserve account whose funds will be available to cover interest shortfalls & monthly fees on the offered notes, the soundness of the legal and financial structure.

The ratings also reflect the capabilities of AH Mortgage Servicing as servicer for the underlying transactions. Fitch rates AH Mortgage Servicing's residential primary servicing for subprime product 'RPS3+', for Alt-A product 'RPS2-' and its residential special servicing 'RSS2-'. The primary servicer rating is based on AH Mortgage Servicing's ability to service, collect and liquidate residential mortgage loans. The special servicer rating reflects the company's ability to manage and liquidate non-performing residential mortgage loans and real estate owned assets.

On Nov. 4, 2010, Fitch assigned a Negative Outlook for the entire U.S. Residential Mortgage Servicer ratings sector on increased concerns surrounding alleged procedural defects in the judicial foreclosure process. Responses to Fitch's recent survey of its rated servicers regarding internal procedures used to verify and execute foreclosure affidavits indicate that all servicers are taking this matter seriously and are continuing to work to resolve any issues uncovered. Fitch may place an individual servicer's ratings on Rating Watch Negative and/or downgrade the ratings if the servicer does not make a diligent and timely review of its processes and take immediate corrective action to remediate any foreclosure action or documentation failures. Fitch may take similar actions on a servicer's ratings if the impact of the additional costs that must be borne by the servicer significantly affects its financial condition. Until those conclusions are reached, the Negative Outlook on the sector impacts all U.S. RMBS servicers.

The actions being taken have been reviewed by a committee of Fitch analysts.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (Sept. 30, 2009);

--'American Home Mortgage Servicing Inc.' (March 19, 2010)

--'AH Mortgage Advance Trust 2010-ADV1' (Aug. 24, 2010)

--'U.S. Residential Mortgage Servicer Advance Receivables Securitization Rating Criteria' (Dec. 6, 2010)

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547326

American Home Mortgage Servicing Inc.

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=272570

AH Mortgage Advance Trust 2010- ADV1

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=544291

U.S. Residential Mortgage Servicer Advance Receivables Securitization Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=563792

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Fitch Ratings
Committee ChairpersonTara Sweeney, +1-212-908-0347
Senior Director
or
Performance AnalystSusan Hosterman, +1-212-908-0670
Director
or
Media Relations:Sandro Scenga, +1-212-908-0278
Email: [email protected]

Source: Fitch Ratings