Fitch Places 22 Classes of Small Balance U.S. CMBS on Rating Watch Negative

2008-07-18 23:04:07 -

- Fitch Ratings places the following classes of Hometown Commercial Capital Trust 2006-1 on Rating Watch Negative:

--$3.4 million class B at 'AA';

--$1.7 million class C at 'AA-';

--$3.2 million class D at 'A';

--$4.3 million class E at 'BBB+';

--$1.5 million class F at 'BBB';

--$1.9 million class G at 'BBB-';

--$1.1 million class H at 'BB+';

--$560,000 class J at 'BB';

--$746,000 class K at 'BB-';

--$372,000 class L at 'B+';

--$560,000 class M at 'B';

--$559,000 class N at 'B-'.

In addition, Fitch places the following classes of Hometown Commercial Capital Trust 2007-1 on Rating Watch Negative:

--$4.6 million class C at 'A';

--$3.9 million class D at 'BBB+';

--$1.5 million class E at 'BBB';

--$1.8 million class F at 'BBB-';

--$1.1 million class G at 'BB+';

--$553,000 class H at 'BB';

--$738,000 class J at 'BB-';

--$368,000 class K at 'B+';

--$554,000 class L at 'B';

--$737,000 class M at 'B-'.

The Watch Negative placements are the result of a potential for significant losses from loans currently in special servicing. Hometown 2006-1 has 6 loans (24.3%) and Hometown 2007-1 has 9 loans (27.9%) with the special servicer. Six of the specially serviced loans between the two transactions have the same the sponsor. The sponsor is no longer able to operate the properties and has put them up for sale as part of a larger portfolio sale totaling 24 assets. The special servicer is currently negotiating contracts to sell the assets. Recent analysis of the potential proceeds from the sale of the assets indicates significant losses are possible in both transactions.

The transactions are small balance CMBS with loan sizes ranging from $960 thousand to $14.4 million. Multiple classes are being placed on rating watch due to the size of the specially serviced loans and the small size of the classes within the transaction. The largest loan of the Hometown 2006-1 is expected to incur a loss as are the top three loans in the Hometown 2007-1 transaction. Multiple notch downgrades are likely once final liquidation proceeds are determined.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

Fitch Ratings, New York
Lisa Cook, +1-212-908-0665
Christopher Bushart, +1-212-908-0606
Media Relations:
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