Fitch Places Class D of RMF Series 1997-1 on Rating Watch Positive.

NEW YORK -- Fitch Ratings places the following class of Red Mountain Funding (RMF) L.L.C.'s, commercial mortgage pass-through certificates, series 1997-1, on Rating Watch Positive (RWP):

--$6.4 million class D at 'BB+/RWP'.

In addition, Fitch affirms the following certificates:

--Interest-Only class X-2 at 'AAA';

--$8.6 million class B at 'AAA';

--$8.7 million class C at 'AAA';

--$3.2 million class E at 'BB';

--$8.7 million class F at 'B-'.

Fitch maintains the $1.3 million class G at 'C/DR5'. Classes A-1, A-2 and X-1 have paid in full. Classes H through K have been fully depleted by realized losses.

Class D has been placed on Rating Watch Positive due to the anticipated repayment of the Clipper loan portfolio (45.4%) in December 2006. As of the September 2006 distribution date, the pool's aggregate principal balance has been reduced 77%, to $36.8 million from $158.8 million at issuance.

Three loan portfolios (71%) are currently in special servicing. The pool's largest loan portfolio is the Clipper pool, which is secured by five skilled nursing facilities (SNF) and one assisted living facility (ALF) located in various cities throughout New England. The loans have been in special servicing since 2000 due to maturity default; however, they remain current. Under the forbearance plan negotiated in December 2003, the loans are scheduled to mature in December 2006. In September 2006, the borrower provided written notice to the special servicer that the loans would be paying off in full upon maturity.

The second loan portfolio in special servicing (13.7%) is secured by four SNFs located in various cities in Mississippi. The portfolio reported a combined trailing twelve months (TTM) June 2006 debt service coverage ratio (DSCR) after actual management fee of 2.80 times (x) and a weighted average occupancy of 90%. Outstanding debt service reserves for the portfolio as of October 2006 total $218,493. The next largest loan in special servicing (11.8%) is secured by a health care facility in Biloxi, MS. The properties reported a combined TTM June 2006 DSCR after actual management fee of 1.99x and occupancy of 68.5%. Outstanding debt service reserves for this loan as of October 2006 are $181,521. Both of these loan portfolios have the same borrower/operator and are in special servicing due to operator bankruptcy. The loans remain current. The operator has emerged from bankruptcy and is operating under a reorganization plan that was approved in June 2006 by the bankruptcy court.

All remaining loans, with the exception of the Clipper loans, are fully amortizing and mature in 2015 or 2016. 31% of the pool is subject to yield maintenance until 2007, after which, for all the loans in the pool, only a prepayment premium will be assessed for payoffs prior to maturity.

Fitch's Distressed Recovery (DR) ratings, introduced in April 2006 across all sectors of structured finance, are designed to estimate recoveries on a forward-looking basis while taking into account the time value of money. For more information on Distressed Recovery ratings, see the full report ('Structured Finance Distressed Recovery Ratings'), which is available on the Fitch Ratings web site at www.fitchratings.com.

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