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Rating Action:

MOODY'S RATES LONG BEACH 2004-1 SUB-PRIME MORTGAGE SECURITIZATION Aaa

19 Apr 2004
MOODY'S RATES LONG BEACH 2004-1 SUB-PRIME MORTGAGE SECURITIZATION Aaa

Approximately $4.5 Billion of Mortgage-Backed Securities Rated

New York, April 19, 2004 -- Moody's Investors Service has assigned a rating of Aaa to the senior certificates issued in Long Beach Mortgage Loan Trust, Series 2004-1, securitization of hybrid adjustable-rate (70%) and fixed-rate subprime residential mortgage loans (30%), originated by Long Beach Mortgage Company (Long Beach). In addition, ratings ranging from Aa1 to Ba2 were assigned to the mezzanine and subordinated classes of certificates issued in the transaction. The ratings on the certificates are based on the quality of the underlying mortgage loans, subordination, available excess spread, and overcollateralization.

Navneet Agarwal, a Moody's analyst, said that the credit quality of the Long Beach originated loans backing the transaction is above average for the subprime mortgage market, and comparable to mortgage pools backing Long Beach's recent transactions. Long Beach targets borrowers with relatively strong credit scores and strong mortgage payment history. The weighted-average FICO score of 643 for the obligors in this pool is higher than in subprime transactions with similar hybrid adjustable rate and fixed rate mortgage loan concentration.

In addition, Long Beach has a greater percentage of mortgage loans for purchasing homes rather than cash outs or debt consolidations as compared to most subprime pools. Purchase money mortgages comprised 46% of this pool. This is a positive feature because the best indicator of property market value is an arms-length sale to a third party. Another salient point about this securitization is that unlike past Long Beach deals, the pools backing these certificates have no second lien loans and no manufactured housing loans.

The mortgage pool is split into group I and group II. The senior Class A-1 and A-2 certificates represent interest in the group I mortgage loans, while the senior Class A-3, A-4 and A-5 certificates represent interest in group II mortgage loans. The mezzanine and subordinate certificates represent interest in both mortgage groups and provide support to all classes of senior certificates. The principal balance of Class C certificates represents over-collateralization for both groups, and is fully funded at transaction closing. Within the Group 1 senior certificates, A-1 and A-2, A-2 will take losses before the class A-1 takes losses i.e. Class A-1 is a super senior class and class A-2 is a senior-support class.

The mortgage pool will be sub-serviced by Washington Mutual Bank. In April 2001, Washington Mutual, Inc., Long Beach's parent, dismantled Long Beach's servicing platform and transferred the existing servicing portfolio to Washington Mutual Bank. As a result of the transfer, the performance of the subprime mortgage pools originated and previously serviced by Long Beach deteriorated significantly. Due to actions taken by Washington Mutual Bank to improve subprime servicing, this deterioration in performance has abated. While serious delinquencies on Long Beach pools remain high compared to performance prior to the servicing transfer, Moody's believes this performance will improve over time. Moody's incorporates the quality of the servicer into its rating analysis.

Long Beach is a specialty finance company engaged in the business of originating, purchasing, and selling subprime mortgage loans. It originates loans through a large network of mortgage brokers and re-underwrites all loans prior to funding.

The complete rating actions are as follows:

Issuer: Long Beach Mortgage Loan Trust 2004-1

Securities: Asset Backed Certificates, Series 2004-1

Originator and Master Servicer: Long Beach Mortgage Company

Sub-Servicer: Washington Mutual Bank FA

Class A-1, $2,200,000,000, Variable, rated Aaa

Class A-2, $220,000,000, Variable, rated Aaa

Class A-3, $1,011,070,000, Variable, rated Aaa

Class A-4, $194,000,000, Variable, rated Aaa

Class A-5, $132,450,000, Variable, rated Aaa

Class M-1, $123,750,000, Variable, rated Aa1

Class M-2, $112,500,000, Variable, rated Aa2

Class M-3, $67,500,000, Variable, rated Aa3

Class M-4, $67,500,000, Variable, rated A1

Class M-5, $56,250,000, Variable, rated A2

Class M-6, $56,250,000, Variable, rated A3

Class M-7, $56,250,000, Variable, rated Baa1

Class M-8, $45,000,000, Variable, rated Baa2

Class M-9, $56,250,000, Variable, rated Baa3

Class B, $33,750,000, Variable, rated Ba2 (Offered as a private placement under Sec. 144A.)

Additional research is available on http://moodys.com

New York
Jay A. Siegel
Managing Director
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Navneet Agarwal
Associate Analyst
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

No Related Data.
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