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AMERICAN SOUTHWEST FINANCIAL 'AAA' CMOS ON FITCHALERT NEGATIVE -- FITCH FINANCIAL WIRE --

 AMERICAN SOUTHWEST FINANCIAL 'AAA' CMOS ON FITCHALERT NEGATIVE
 -- FITCH FINANCIAL WIRE --
 NEW YORK, June 19 /PRNewswire/ -- The 'AAA' ratings on six series of American Southwest Financial Corp.'s CMO "builder bonds" secured by GNMA, FNMA, and FHLMC Certificates and whole loans are placed on FitchAlert with negative implications. The action follows the bankruptcy filing of one of the builder finance subsidiaries which pledged the collateral to secure the collateralized mortgage obligations (CMOs).
 The affected series are: GNMA-collateralized bonds Series C and D, and mortgage-collateralized bonds Series E, F, G and H.
 The builder, Estes Homebuilding Co., caused its subsidiary, WE Financial, to file in bankruptcy even though the subsidiary is solvent and there is sufficient collateral to pay all of its obligations securing the bonds. Fitch has been informed that the subsidiary intends to accelerate and pay all of its obligations under the funding agreements that secure the CMOs. Nevertheless, the automatic stay became operable last Thursday and, as a result, no debt can be paid and the trustee cannot foreclose on the collateral until the stay is lifted. Fitch anticipates that the trustee will seek relief from the stay.
 Due to the decline in interest rates since the CMOs were issued, the value of the collateral exceeds the amount of the subsidiary's obligations. WE Financial's filed reorganization plan suggests that it expects acceleration of the bonds to result in the return of any excess collateral value to WE Financial. This could cause a reinvestment loss to the bondholders, which is likely to be ameliorated by the prepayment premium provided for in the indenture.
 -0- 6/19/92
 /CONTACT: Leah W. Murch, attorney, 212-908-0511, or Gregory G. Raab, 212-908-0536, both of Fitch/ CO: American Southwest Financial Corp. ST: IN: FIN SU: RTG


CK -- NY017 -- 1838 06/19/92 10:24 EDT
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Publication:PR Newswire
Date:Jun 19, 1992
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