Fitch Ratings downgrades Merrill mortgage securities
Fitch Ratings downgraded four classes of Merrill Lynch Mortgage Trust securities certificates backed by commercial real estate because the underlying loans are expecting losses. At the same time, 17 classes of loans in the same series of securities were affirmed by the ratings giant. Fitch specifically classified 76 loans as mortgages of concern. About 25 of those 76 are specially serviced loans. The entire loan pool subjected to the downgrade had an aggregate principal balance of $2.2 billion at the end of December, compared to $2.5 billion at issuance. Of those loans in special servicing, 16 are real-estate owned, three are in foreclosure, another three are delinquent and 1% are current. One of the largest contributors to the expected losses in the pool is a three-story office building in Scottsdale, Ariz. The loan was moved into special servicing in October of 2009 when a large tenant that fully occupied one of the buildings terminated its lease and vacated the premises. As of mid-last year, the building's occupancy rate stood at 62%. A hotel located in Tampa, Fla., also is contributing to uncertainty over the pool of loans with a special servicer saying it would like to pursue a foreclosure. Write to Kerri Panchuk.