Fitch Lowers AMC's Subprime Servicer Rating to 'RPS3+'; on Rating Watch Negative.

NEW YORK -- Fitch Ratings has downgraded AMC Mortgage Services, Inc.'s (AMC) servicer ratings as follows:

--Residential primary servicer rating for subprime product to 'RPS3+' from 'RPS2+';

--Residential special servicer rating to 'RSS3+' from 'RSS2+'.

Fitch has also placed the servicer ratings on Rating Watch Negative. AMC is a subsidiary of ACC Capital Holdings (ACC).

The rating actions reflect the challenging operating environment in the subprime mortgage market and the evolving nature of ACC's relationship with Citigroup (Citi). As previously noted in a recent rating action commentary, ACC's financial flexibility had been constrained by significant legal settlement costs, asset quality challenges, which led to an elevated level of early payment default repurchases, and increasing delinquency levels, resulting in a significantly higher cost of servicing. Many of these challenges have been exacerbated by a sharp decline in origination volume and declining risk appetite among RMBS investors and liquidity providers. Although Citi has provided some interim liquidity, Fitch does not rely on Citi to provide explicit support.

On Feb. 28, 2007, ACC announced that the company had entered into an agreement with Citi. As a result of the agreement, ACC secured additional working capital, provided by the company's shareholders and Citi. Citi also agreed to become ACC's primary warehouse lender. Finally, Citi has an option, in the form of a conditional purchase agreement, to acquire ACC's subprime wholesale mortgage originator, Argent Mortgage Co., LLC, and its mortgage servicing platform, AMC, subject to certain requirements, including achieving business milestones and satisfaction of regulatory filings and approvals. On March 15, 2007, ACC announced its plans to reduce its workforce across all lines of business and consolidate its operations to cut costs.

Fitch does not formally rate the credit or financial strength of AMC's parent, ACC, or any of its subsidiaries. However, a company's financial condition is an important component of Fitch's servicer rating process. Fitch believes the steps taken thus far have alleviated the short term pressures on the company. However, the rating actions reflect the challenges that still face the company in achieving the business milestones in the conditional purchase agreement with Citi, funding its ongoing servicing operation, maintaining servicing quality, increasing its servicing portfolio through originations or servicing acquisitions, and attracting third-party servicing opportunities, in an increasingly challenging subprime mortgage market. Historically, AMC has serviced loans originated by its affiliates and has not had significant experience in acquiring servicing portfolios or performing third party servicing. The Rating Watch Negative indicates that further downgrades are possible, depending upon the stability of the servicer's portfolio, operational capabilities, and financial condition.

An 'RPS3+' rated servicer is fully acceptable for new residential mortgage-backed security (RMBS) transactions. Fitch will continue to monitor ACC's legal situation, financial condition and ability to maintain long term stable funding and its impact on loan servicing and operational capabilities.

Fitch has rated 103 residential mortgage-backed securities (RMBS) transactions collateralized by mortgage loans originated by ACC subsidiaries. Of the 103 transactions, all but 16 transactions (issued under the Park Place Securities, Inc. shelf) are serviced by AMC. The servicer rating downgrade will not have a direct immediate effect on the ratings of the AMC serviced transactions. All transactions at least one year old have had rating actions within the last six months, with Fitch affirming the majority of outstanding tranches. Fitch will continue to closely monitor the performance of the AMC serviced transactions.

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 the rating levels, Fitch further differentiates ratings by plus (+) and minus (-) as well as the flat rating. For more information on Fitch's residential servicer rating program, please see Fitch's report 'Rating U.S. Residential Mortgage Servicers,' dated Nov. 29, 2006, which is available on the Fitch Ratings 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.