Fitch Affirms Saxon Mortgage Services Resi Servicer Rating.

NEW YORK -- Fitch Ratings affirms Saxon Mortgage Services, Inc's (SMSI) residential primary servicer rating for subprime product at 'RPS2+'. The affirmation of the subprime rating is based on SMSI's experienced management team, effective loan administration practices, commitment to technology enhancements, and the servicer's reliable default management practices. E[acute accent]Headquartered in Fort Worth, Texas, SMSI is a subsidiary of Saxon Capital, Inc. (SCI) and has been servicing subprime loans for over 11 years. In September 2004, SCI's real estate investment trust (REIT) conversion was completed. Over the past two years SMSI has experienced a 208% growth in its portfolio. As of June 2005, SMSI serviced 163,039 loans with an outstanding principal balance of over $24.6 billion, a 95% growth by loan volume, and a 117% growth by dollar volume over the prior year. SMSI's 2006 servicing strategy includes achieving 10%-20% portfolio growth by maintaining portfolio runoff at current levels through 25% organic and 75% third-party growth. E[acute accent]Since Fitch's last review, SMSI continued to refine its servicing platform through operational and technological improvements, which have further enhanced efficiencies and productivity of the company. To support its portfolio growth, SMSI has continued to build a strong management team and over the past year has restructured management and workflows in its Fort Worth servicing center. In addition, SMSI established a Richmond, Virginia, facility, hiring an experienced senior management team with initial staffing for call center and loss mitigation functions. Management expects full servicing redundancy by fourth-quarter 2006. E[acute accent]Fitch believes that SMSI will remain a reliable servicer with a scalable servicing platform with the capacity, systems, processes, and controls to meet its projected volume. However, Fitch will continue to monitor SMSI's servicing platform for further operational changes as the company pursues its third-party growth initiatives. E[acute accent]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 (-) symbols, as well as the flat rating. For more information on Fitch's residential servicer rating program, 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.

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