Fitch Affirms 1 & Upgrades 3 Classes of C-BASS CBO VII, LTD.

NEW YORK -- Fitch Ratings affirms one and upgrades three classes of notes issued by C-BASS CBO VII, LTD. (C-BASS VII). These rating actions are the result of Fitch's review process and are effective immediately:

-- $196,324,701 class A notes affirmed at 'AAA';

-- $20,000,000 class B notes upgraded to 'AAA' from 'AA+';

-- $20,000,000 class C notes upgraded to 'AA' from 'A+';

-- $19,438,956 class D notes upgraded to 'A' from 'BBB+';

C-BASS VII is a collateralized debt obligation (CDO) that closed July 30, 2003 and is managed by Credit-Based Asset Servicing and Securitization LLC (C-BASS; rated 'CAM1' by Fitch for managing structured finance CDOs). C-BASS VII has a static portfolio composed of residential mortgage-backed securities (RMBS), CDO, and other asset-backed securities (ABS).

These upgrades are primarily due to the increased credit enhancement available on all notes, as a result of the normal amortization of the class A notes and the scheduled principal payments of the class D notes. In particular, 35% of the class A notes have already amortized, and 28% of the class D notes have been paid down. As of the trustee report dated Feb. 28, 2006, the delevering of the class A and D notes also resulted in increased overcollateralization (OC) ratios since the last rating action on June 10, 2005, as evidenced by the class A/B OC test increasing to 137.2% from 130.2%, relative to a trigger of 115.0%. In addition, the class A/B interest coverage (IC) test decreased to 163.2% from 178.9%, but continues to remain well above its trigger of 110.0%. During the same period, the overall collateral credit quality improved, as the weighted average rating factor (WARF) decreased to 13 ('BBB+/BBB') from 14 ('BBB').

The rating of the class A and B notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The ratings of the class C and D notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date.

Fitch will continue to monitor and review this transaction for future rating adjustments. Additional deal information and historical data are available on the Fitch Ratings web site at www.fitchratings.com. For more information on the Fitch VECTOR Model, see 'Global Rating Criteria for Collateralised Debt Obligations,' dated Sept. 13, 2004 and also available on Fitch's 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.