Correction: Fitch Downgrades Fairbanks' Servicer Ratings.

Business Editors

NEW YORK--(BUSINESS WIRE)--June 17, 2003

(This is an amended version of an earlier press release which includes a more precise listing for the residential primary servicer rating.)

Fitch Ratings downgrades Fairbanks Capital Corp's (Fairbanks) residential primary servicer ratings for subprime and home equity to 'RPS3-' from 'RPS2-', its Alt-A primary servicer rating to 'RPS3' from 'RPS2-' and its special servicer rating to 'RSS3' from 'RSS2-'. In addition. Fitch has revised the Rating Watch on Fairbanks to Evolving from Negative.

These rating actions are the result of the completion of Fitch's targeted on-site reviews of Fairbanks' four servicing facilities located in Utah, Texas, Florida and Pennsylvania. They incorporate our understanding of the new corporate direction, the restructure of senior management, and the company's recently strengthened financial condition. However, the ratings also reflect the uncertainty regarding Fairbanks' pending settlement with the Federal Trade Commission (FTC) and the Department of Housing and Urban Development (HUD).

Fitch determined during its review that some functions within Fairbanks continue to perform well, such as the Alt-A servicing functions conducted at its Austin facility, default servicing and timeline management. However, other areas, such as escrow, cashiering, early collections and customer service cause significant concern. Most of the identified issues have arisen, or have come to light, as a result of the company's aggressive portfolio growth initiatives and/or a failure of the servicer to adopt and enforce the processes necessary to effectively service its changing portfolio. These issues arose primarily from the Bank of America (EquiCredit) subprime acquisition (approximately $22 billion completed in April 2002), and/or their more recent flow acquisitions, which included over $13 billion during the first four months of 2003. This flow volume evidenced a marked change to Fairbanks' strategy for increasing servicing volume from their historic bulk acquisitions to being a recipient of significant flow business, received from multiple sources in groups or as individual loans, on a monthly basis. Process failures, primarily resulting from these sources and the prior management's resistance to change its basic collection/customer service philosophy, were evidenced in the number and severity of customer disputes and lawsuits.

In addition, these issues caused an increase in call volumes, which resulted in excessive hold times and abandonment rates, funds placed in suspense accounts that were either preventable and/or should have been resolved more timely, and the charging of unwarranted fees.

It is important to note that the deficiencies noted above, as well as several others, have been acknowledged by Fairbanks, up to their highest level of senior management, including their Board of Directors. Further, in an effort to correct these problems, the new restructured senior management team has established detailed action plans which include process changes, outsourcing of certain functions, the development of a consumer relations committee, and the establishment of an independent unit to review all loans before foreclosure is initiated. Fitch believes Fairbanks' action plan is well thought out and will address most of the concerns raised during our review. However, since many of these changes have only recently been implemented, Fitch will conduct another on-site review within the next 3-4 months to fully evaluate their impact.

Fitch shared the industry's concerns with regard to Fairbanks' charging of interest on servicing advances for certain transactions, including IMC Mortgage Company and ContiMortgage Corp. As a result, Fairbanks has provided Fitch with documentation that this practice has ceased, and that monies owed to the trust on these deals will be returned with the June remittances.

Fairbanks announced that it finalized agreements with its bankers to extend its credit facilities for servicing advances and working capital through September 2004. This, coupled with the prior announcement that Fairbanks' primary shareholders will purchase a $35 million subordinated participation interest in other Fairbanks' indebtedness has given the company the financial flexibility to fund its servicing operations over the near term. Fitch will carefully monitor the resolution of the FTC and HUD investigations to determine the financial impact on the company. An adverse settlement could have negative repercussions for the ratings, absent additional financial support from the company's shareholders.

The servicer ratings will remain on Rating Watch Evolving pending: the results of the FTC and HUD investigations; confirmation through internal and/or external audits that the procedural changes, designed to correct process breakdowns, are having the desired effects; staffing levels remain stabilized; performance does not deteriorate; and that the disputes continue to decline to a level that is more typical for a servicer of this size. Further, based on Fitch's review findings and servicer ratings downgrade, Fitch's Performance Analytics Group is currently reviewing all Fitch rated deals where Fairbanks is the servicer to determine if any rating actions are necessary.

Fitch rates residential mortgage primary, master, and special servicers on a scale of 1 to 5, with 1 being the highest rating. Within some of these rating levels, Fitch further differentiates ratings by plus (+) and minus (-) as well as the flat rating. For more information on Fitch's residential mortgage servicer rating program, please see Fitch's report, 'Residential Mortgage Servicer Ratings', dated Feb. 21, 2003, which is available on the Fitch Ratings web site at 'www.fitchratings.com'.