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Announcement:

Moody's places on review for possible downgrade 16 certificates from 11 Su Casita Mexican RMBS

 The document has been translated in other languages

Global Credit Research - 15 Sep 2010

Mexico, September 15, 2010 -- Moody's de México (Moody's) has placed on review for possible downgrade the ratings of 16 certificates from 11 residential mortgage backed securitizations (RMBS) issued by Hipotecaria Su Casita, S.A. de C.V. Sociedad Financiera de Objeto Múltiple E.N.R. ("Su Casita") in Mexico. The collateral backing the affected transactions consists of first-lien, fixed-rate loans denominated in UDIS or Mexican Pesos and granted primarily to low-income borrowers.

The complete rating action is as follows:

Originator and Servicer: Hipotecaria Su Casita, S.A. de C.V. Sociedad Financiera de Objeto Múltiple E.N.R.

Issuer: The Bank of New York Mellon, S.A. Institución de Banca Múltiple, acting solely as trustee.

-- Class A BRHCGCB 03U, ratings of Baa1 (sf) (Global Scale, Local Currency) and Aaa.mx (sf) (National Scale) placed on review for downgrade.

-- Class A BRHCGCB 04U, ratings of Baa1 (sf) (Global Scale, Local Currency) and Aaa.mx (sf) (National Scale) placed on review for downgrade.

-- Class A BRHSCCB 05U, ratings of Baa1 (sf) (Global Scale, Local Currency) and Aaa.mx (sf) (National Scale) placed on review for downgrade.

-- Class A BRHSCCB 06, ratings of Baa1 (sf) (Global Scale, Local Currency) and Aaa.mx (sf) (National Scale) placed on review for downgrade.

-- Class A BRHSCCB 06-2, ratings of Baa1 (sf) (Global Scale, Local Currency) and Aaa.mx (sf) (National Scale) placed on review for downgrade.

-- Class A BRHSCCB 06U, ratings of Baa1 (sf) (Global Scale, Local Currency) and Aaa.mx (sf) (National Scale) placed on review for downgrade.

-- Class A BRHSCCB 06-3U, ratings of Baa3 (sf) (Global Scale, Local Currency) and Aa2.mx (sf) (National Scale) placed on review for downgrade.

-- Class B BRHSCCB 06-4U, ratings of B3 (sf) (Global Scale, Local Currency) and B1.mx (sf) (National Scale) placed on review for downgrade.

-- Class A BRHSCCB 06-5U, ratings of Baa1 (sf) (Global Scale, Local Currency) and Aaa.mx (sf) (National Scale) placed on review for downgrade

-- Class B BRHSCCB 06-6U, ratings of Ba2 (sf) (Global Scale, Local Currency) and A2.mx (sf) (National Scale) placed on review for downgrade.

-- Class A BRHSCCB 07, ratings of Baa1 (sf) (Global Scale, Local Currency) and Aaa.mx (sf) (National Scale) placed on review for downgrade.

-- Class A-1 BRHCCB 07U, ratings of Baa1 (sf) (Global Scale, Local Currency) and Aaa.mx (sf) (National Scale) placed on review for downgrade.

-- Class A-2 BRHCCB 07-2U, ratings of B3 (sf) (Global Scale, Local Currency) and Ba3.mx (sf) (National Scale) placed on review for downgrade.

Issuer: HSBC México, S.A. Institución de Banca Múltiple, Grupo Financiero HSBC, División Fiduciaria, acting solely as trustee.

-- Class A-1 BRHCCB 08U, ratings of Baa1 (sf) (Global Scale, Local Currency) and Aaa.mx (sf) (National Scale) placed on review for downgrade.

-- Class A-2 BRHCCB 08-2U, ratings of Ba1 (sf) (Global Scale, Local Currency) and A1.mx (sf) (National Scale) placed on review for downgrade.

-- Class B BRHCCB 08-3U, ratings of Caa1 (sf) (Global Scale, Local Currency) and Caa1.mx (sf) (National Scale) placed on review for downgrade.

The last rating action on the affected certificates occurred on January 15, 2010, when their current ratings were confirmed.

RATINGS RATIONALE

The rating actions reflect heightened concerns with respect to i) Su Casita's stability as servicer of the affected RMBS transactions following Moody's recent downgrades of the company's issuer ratings and its servicer quality rating, ii) future collateral performance given that an increased risk of a servicer disruption may result in weakening of collections activities, leading to increased delinquencies, lower recoveries, and ultimately higher losses on the securitized pools, and iii) possible interest payment defaults on certain certificates should significant collection disruptions occur as a result of servicing disruption.

While some of the affected transactions may avert an interest payment default in the event of significant disruptions to collections as a result of external sources of liquidity (such as a partial credit guarantee or a financial guarantee policy), not all transactions count with such external sources of liquidity. In addition, and considering recent cases in U.S. RMBS covered by financial guarantees, for those transactions that benefit from a financial guarantee policy from a monoline that promises timely payment of interest, there is the risk of non-payment by the provider of the policy.

On September 13, 2010, Moody's downgraded Su Casita's global scale local currency issuer rating to Caa2 from B2 (national scale issuer rating downgraded to Caa2.mx from Baa3.mx), and placed these ratings on review for further possible downgrade. These rating actions follow the announcement on September 10th that negotiations with BBVA Bancomer to purchase a portion of Su Casita's loan portfolio had ceased due to an inability to reach agreement on valuation. Su Casita's current liquidity position is weak, as the company has sufficient funds available to cover existing debt only through the middle of 1Q 2011, at which time the company would suffer a liquidity shortfall.

Today, Moody's also downgraded the servicer quality (SQ) rating of Su Casita as servicer of residential mortgage loans to SQ4 from SQ3+; the rating remains on review for further possible downgrade. This rating action was a consequence of Moody's recent downgrade of Su Casita's issuer ratings and concerns about its stability as servicer. During economic downturns a servicer´s financial strength becomes even more important in connection with the performance of the portfolio under management. There is a risk that a company with a weakened financial strength may have a limited ability to devote sufficient resources to sustain its servicing capabilities in a difficult economic environment.

Moody's ongoing review of the affected transactions will focus on the performance of the transactions and the risk of a potential servicing disruption that may cause an interest payment default on the affected certificates. Moody's will also focus on Su Casita's ability to repay its short-term obligations, in light of the company's limited access to external sources of capital. In addition, Moody's will also closely monitor the company's capital structure as well any additional support it may receive from Sociedad Hipotecaria Federal.

The primary source of assumption uncertainty is Su Casita's ultimate strategic direction and solvency, and the extent of any potential servicing disruptions.

RATING METHODOLOGY

The principal methodology used in rating these securities was "Moody's Approach to Monitoring Residential Mortgage-Backed Securitizations in Mexico" published August 31, 2009, and available on www.moodys.com in the Ratings Methodologies sub-directory under the Research and Ratings tab. Further, Moody's considered that a loan servicer's capabilities can have a significant effect - either positive or negative - on realized loss levels in residential mortgage loan securitizations. Moody's assesses a servicer's ability to affect residential mortgage losses today and into the future. A servicer's financial stability could negatively affect its ability to properly perform its duties as primary servicer of securitized mortgage loans. Furthermore, any negative impact on the servicing function may in turn adversely affect the performance of the loans serviced by the company. Other methodologies and factors that may have been considered can also be found in the Rating Methodologies sub-directory on Moody's website. In addition, Moody's publishes a weekly summary of structured finance credit, ratings and methodologies, available to all registered users of our website, at www.moodys.com/SFQuickCheck.

New York
Maria Muller
Senior Vice President
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Karen Ramallo
Asst Vice President - Analyst
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's de Mexico S.A. de C.V
Ave. Paseo de las Palmas
No. 405 - 502
Col. Lomas de Chapultepec
Mexico, DF 11000
Mexico

Moody's places on review for possible downgrade 16 certificates from 11 Su Casita Mexican RMBS
No Related Data.
© 2018 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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