New York, May 08, 2009 -- Moody's Investors Service has confirmed the ratings of 35 classes and
downgraded two classes of notes issued by First Alliance Mortgage Loan
Trust. The securities are supported by insurance policies issued
by MBIA Insurance Corporation (MBIA) or Financial Security Assurance Inc.
(FSA).
The current ratings on the securities are consistent with Moody's practice
of rating insured securities at the higher of (1) the guarantor's insurance
financial strength rating and (2) the underlying rating, based on
Moody's modified approach to rating structured finance securities wrapped
by financial guarantors.
As part of evaluating the current ratings for the securities, Moody's
Investors Service also reviewed the underlying ratings. The underlying
ratings reflect the intrinsic credit quality of the securities in the
absence of the guarantee.
The underlying ratings on the securities are based on the methodology
applied to all transactions with small pool factors. Moody's
defines low pool factor deals as those that meet one of the following
two criteria: (1) the outstanding collateral balance is less than
$1 million, and the pool factor is less than 5% or
(2) the pool has fewer than 50 loans remaining
Moody's uses the following methodology to estimate losses on low
pool factor deals
First, gross defaults are determined by applying assumed lifetime
roll-rates (probabilities of transition to default) to the transactions'
current delinquency buckets ("delinquency pipeline") and a
pipeline multiplier. The pipeline multiplier accounts for further
possible defaults that might arise from borrowers that are current.
The pipeline multiplier differs for each deal based on the number of loans
remaining in the pool - greater the number of loans remaining,
the higher the multiplier. The estimated defaults are subject to
a floor -- a minimum default. The minimum default also differs
based on the number loans remaining in the pool. The fewer the
number of loans remaining in the pool the higher the minimum default since
each loan represents a higher percentage of the pool.
The final default number is then multiplied by expected loss severity
to arrive at our expected loss estimate. Loss severity differs
by transaction and is higher for more recent vintages.
Complete rating action follows:
First Alliance Mortgage Loan Trust 1993-1
A-2, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
Financial Guarantor: MBIA Insurance Corporation (B3, previously
on 2/18/2009 downgraded from Baa1)
First Alliance Mortgage Loan Trust 1993-2
A-1, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
Financial Guarantor: MBIA Insurance Corporation (B3, previously
on 2/18/2009 downgraded from Baa1)
First Alliance Mortgage Loan Trust 1994-1
A-1, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
A-3, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
Financial Guarantor: MBIA Insurance Corporation (B3, previously
on 2/18/2009 downgraded from Baa1)
First Alliance Mortgage Loan Trust 1994-3
A-1, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
A-2, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
Financial Guarantor: MBIA Insurance Corporation (B3, previously
on 2/18/2009 downgraded from Baa1)
First Alliance Mortgage Loan Trust 1995-2
A-3, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
A-4, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
Financial Guarantor: MBIA Insurance Corporation (B3, previously
on 2/18/2009 downgraded from Baa1)
First Alliance Mortgage Loan Trust 1996-1
A-1, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
A-2, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
Financial Guarantor: MBIA Insurance Corporation (B3, previously
on 2/18/2009 downgraded from Baa1)
First Alliance Mortgage Loan Trust 1996-2
A-3, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
A-4, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
Financial Guarantor: MBIA Insurance Corporation (B3, previously
on 2/18/2009 downgraded from Baa1)
First Alliance Mortgage Loan Trust 1996-3
A-1, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
A-2, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
Financial Guarantor: MBIA Insurance Corporation (B3, previously
on 2/18/2009 downgraded from Baa1)
First Alliance Mortgage Loan Trust 1996-4
A-2, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
Financial Guarantor: MBIA Insurance Corporation (B3, previously
on 2/18/2009 downgraded from Baa1)
First Alliance Mortgage Loan Trust 1997-1
A-1, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
A-2, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
Financial Guarantor: MBIA Insurance Corporation (B3, previously
on 2/18/2009 downgraded from Baa1)
First Alliance Mortgage Loan Trust 1997-2
A-1, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
A-2, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
Financial Guarantor: MBIA Insurance Corporation (B3, previously
on 2/18/2009 downgraded from Baa1)
First Alliance Mortgage Loan Trust 1997-3
A-1, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
A-2, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
Financial Guarantor: MBIA Insurance Corporation (B3, previously
on 2/18/2009 downgraded from Baa1)
First Alliance Mortgage Loan Trust 1997-4
A-2, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
A-3, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
Financial Guarantor: MBIA Insurance Corporation (B3, previously
on 2/18/2009 downgraded from Baa1)
First Alliance Mortgage Loan Trust 1998-1A
A-1, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
Financial Guarantor: MBIA Insurance Corporation (B3, previously
on 2/18/2009 downgraded from Baa1)
First Alliance Mortgage Loan Trust 1998-2
2A, Downgraded to Aa3; previously on 7/21/2008 Aaa Placed Under
Review for Possible Downgrade
2F, Downgraded to Aa3; previously on 7/21/2008 Aaa Placed Under
Review for Possible Downgrade
Financial Guarantor: Financial Security Assurance Inc. (Aa3,
previously on 11/21/2008 downgraded from Aaa)
First Alliance Mortgage Loan Trust 1998-3
A-3, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
A-4, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
Financial Guarantor: MBIA Insurance Corporation (B3, previously
on 2/18/2009 downgraded from Baa1)
First Alliance Mortgage Loan Trust 1998-4
A-2, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
Financial Guarantor: MBIA Insurance Corporation (B3, previously
on 2/18/2009 downgraded from Baa1)
First Alliance Mortgage Loan Trust 1999-1
A-1, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
A-2, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
Financial Guarantor: MBIA Insurance Corporation (B3, previously
on 2/18/2009 downgraded from Baa1)
First Alliance Mortgage Loan Trust 1999-2
A-1, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
A-2, Confirmed at A2; previously on 11/16/2008 A2 Placed
Under Review for Direction Uncertain
Financial Guarantor: MBIA Insurance Corporation (B3, previously
on 2/18/2009 downgraded from Baa1)
First Alliance Mortgage Loan Trust 1999-3
Cl. A-1, Confirmed at A2; previously on 11/16/2008
A2 Placed Under Review for Direction Uncertain
Cl. A-2, Confirmed at A2; previously on 11/16/2008
A2 Placed Under Review for Direction Uncertain
Financial Guarantor: MBIA Insurance Corporation (B3, previously
on 2/18/2009 downgraded from Baa1)
First Alliance Mortgage Loan Trust 1999-4
Cl. A-1, Confirmed at A2; previously on 11/16/2008
A2 Placed Under Review for Direction Uncertain
Cl. A-2, Confirmed at A2; previously on 11/16/2008
A2 Placed Under Review for Direction Uncertain
Financial Guarantor: MBIA Insurance Corporation (B3, previously
on 2/18/2009 downgraded from Baa1)
For more information please see www.moodys.com.
New York
Debashish Chatterjee
VP - Senior Credit Officer
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
Aron Bergman
Analyst
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's takes action on notes issued by First Alliance Mortgage Loan Trust