NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed the following classes of Asset Securitization Corp.'s commercial mortgage pass-through certificates, series 1995-MD IV:
-- $16.9 million class B-1 at 'A+sf'; Outlook Evolving;
-- Notional class A-CS2 at 'A+sf'; Outlook Evolving;
-- $27.9 million class B-2 at 'Dsf/RE50%';
-- $769 class B-2H at 'Dsf/RE50%'.
Classes A-1, A-1P, A-2, A-3, A-4, A-5 and notional A-CS1 have paid in full. Class A-CS3 was previously withdrawn.
The affirmation on class B-1, Evolving Outlook is due to increased credit enhancement combined with continued principal write-downs on classes B-2 and B-2H relative to the previous review. The Evolving Outlook assignment reflects uncertainty regarding the amount and timing of pending litigation costs associated with the transaction. Class A-CS2 is an interest-only class based on the balance of class B-1.
One loan remains in the pool: Columbia Sussex, which has been fully defeased and has an anticipated repayment date in 2015. As of the March 2012 remittance date, the transaction's outstanding principal balance has been reduced by 95.4% to $44.8 million, from $967.2 million at issuance.
Fitch maintains the Evolving Outlook on class B-1 because of potential future losses due to litigation costs which may occur before the class is paid in full. Class B-1 is currently receiving principal payments from the scheduled amortization of the Columbia Sussex loan, but could be affected by litigation costs in the future. If litigation costs interrupt the payment of principal, Fitch expects to downgrade the bond to 'D'. If the litigation is resolved without affecting class B-1, Fitch expects to upgrade the bond.
Certain interest-only bondholders filed suit against the former special servicer, Criimi Mae, based on the special servicer's handling of the respective resolutions of the Hardage Hotel Portfolio and Motels of America loans, both of which were resolved in 2003. The Court granted the Defendant's Motion for Summary Judgment dismissing the complaint on Feb. 8, 2011; subsequently the Plaintiffs filed an appeal on March 9, 2011. There has been no update on the appeal since Fitch's last review.
The pending appeal and resulting legal fees could cause principal losses to class B-1 before it pays off if the fees exceed the balance of class B-2 and B-2H. Because classes B-1, B-2 and B-2H are principal-only classes, legal fees or adverse judgments would cause realized losses to B-2 first, followed by B-1. Fitch will monitor the status of the appeal and any associated fees.
Additional information on Fitch's criteria for analyzing structured finance transactions is available in the Aug. 4, 2011 report, 'Global Structured Finance Rating Criteria', which is available at 'www.fitchratings.com' under the following headers:
Structured Finance >> CMBS >> Criteria Reports
Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
-- 'Global Structured Finance Rating Criteria' (Aug. 4, 2011).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=646569
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