Fitch Downgrades CS First Boston Mortgage Securities Corp. Series 2007-TFL2

NEW YORK--(BUSINESS WIRE)--Fitch Ratings downgrades the following class of CS First Boston Mortgage Securities Corp., pass-through certificates, series 2007-TFL2 as follows:

-- $33.5 million class L to 'BB-' from 'BBB-';

In addition, Fitch maintains on Rating Watch Negative the following classes:

-- $8.9 million class BSL-A at 'AA-';

-- $9.0 million class BSL-B at 'A+';

-- $8.9 million class BSL-C at 'A';

-- $8.9 million class BSL-D at 'A-';

-- $7.9 million class BSL-E at 'BBB+'; and

-- $9.9 million class BSL-F at 'BBB'.

In addition, Fitch affirms the following classes:

-- $521.3 million class A-1 at 'AAA';

-- $100 million class A-2 at 'AAA';

-- $207 million class A-3 at 'AAA';

-- Interest-only class A-X-1 at 'AAA';

-- Interest-only class A-X-2 at 'AAA';

-- $45.7 million class B at 'AA+';

-- $42.6 million class C at 'AA';

-- $33.5 million class D at 'AA-';

-- $36.6 million class E at 'A+';

-- $36.5 million class F at 'A';

-- $33.5 million class G at 'A-';

-- $39.6 million class H at 'BBB+';

-- $36.6 million class J at 'BBB'; and

-- $39.6 million class K at 'BBB-'.

Fitch also affirms the following non-pooled components of the related trust assets:

-- $91.6 million class CSP-A1 at 'AAA';

-- $33.6 million class CSP-A2 at 'AAA';

-- Interest-only class CSP-AX at 'AAA';

-- $10.6 million class CSP-B at 'AA+';

-- $11.5 million class CSP-C at 'AA';

-- $9.9 million class CSP-D at 'AA-';

-- $10 million class CSP-E at 'A+';

-- $9.7 million class CSP-F at 'A';

-- $19.9 million class CSP-G at 'BBB+';

-- $9.9 million class CSP-H at 'BBB';

-- $15.9 million class CSP-J at 'BBB-'; and

-- $18 million class CSP-K at 'BB+'.

The downgrade is a result of the Resorts Atlantic City (11.7%) not performing to expectations. The Resorts Atlantic City is a 942-room casino/hotel located in Atlantic City, NJ. Total debt on the loan is $360 million, which consists of a $175 million senior component which is held in the trust and a $185 million junior component held outside the trust. As of first-quarter 2008, the property's net cash flow declined approximately 58% from Fitch's stressed net cash flow at issuance. The decrease in cash flow is attributed to multiple factors: increased competition, a smoking ban introduced throughout the entire Atlantic City gaming market, and the overall negative performance of the gaming industry due to general macro-economic conditions throughout the U.S. For the first three months ended March 31, 2008, the Atlantic City gaming market recorded a 17.7% decrease in gross operating profit from the same period in 2007. Fitch does not expect the cash flow to reach the same levels as at issuance.

Fitch maintains Rating Watch Negative on rake classes related to Biscayne Landing (10.9%) as a result of the transfer to special servicing for default. The borrower failed to meet the mandatory prepayment of $17 million that was due on Jan. 30, 2008. Any resolution costs or potential losses could be incurred by one or more of the BSL rake classes, which are collateralized by the non-pooled senior portions of the Biscayne Landing loan and are subordinate to the pooled senior portion. Biscayne Landing is the largest undeveloped parcel of urban land in South Florida, consisting of 188 acres in North Miami. The original development plan that revolved around a master planned community has been modified by the borrower to better represent current demand, and the city recently approved an alternative town center commercial concept with a reduced residential component and the inclusion of big box retail and in-line space in addition to entertainment, office, and hotel venues. The Biscayne Landing loan matures on May 9, 2009 and has two one-year extension options.

The affirmations are due to expected performance and continued stabilization of the remaining loans since issuance. As of the July 2008 distribution date, the transaction's aggregate principal balance has decreased 0.62%. All of the original eight loans remain in the trust. Of the loans scheduled to mature in 2008, all have extension options ranging from two to three years.

The transaction consists of loans collateralized by hotel properties (49.1%), office (24%), healthcare (16%), and land (10.9%).

The largest loan is secured by the Planet Hollywood Resort and Casino in Las Vegas, NV. The property is in the midst of a $178 million renovation and re-development project that includes substantial improvements to the facade, casino, restaurants, and guestrooms. Renovations are nearing completion, with the final 1,076 guestrooms on schedule to be completed prior to the 2008 holiday season. The loan's initial maturity is Dec. 12, 2008, with three, one-year extension options.

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.