Moody's Investors Service downgraded seven classes of Falcon Financial LLC's series 2003-1 auto dealership franchise loan ABS Wednesday, due primarily to the deterioration of a single loan in the pool. The loan, which makes up 6.8% of the total pool, was made to The Dodge of Midlothian automobile dealership, which has since lost floorplan funding from DaimlerChrysler Financial Services N.A. The transaction priced in January 2003 via Goldman Sachs.

Fitch Ratings lowered the class E to 'BB+' from 'BB', and the class F to 'CCC' from 'B'. According to Fitch, the party operating the dealership has filed a complaint against Daimler Chrysler for substantially restricting its ability to stock its floorplan, and no longer financing its customers. The borrower, Gorman Family Holdings, owns the real estate, valued at $5.85 million in an updated appraisal.

"The Servicer has confirmed to Fitch that DaimlerChrysler remains very interested in preserving the location and is attempting to identify a suitable operator," Fitch writes. "The Servicer is attempting to gain control of the real estate as expeditiously as possible without having to foreclose. This should save the trust a significant amount of both time and money, as a foreclosure proceeding would be a long and expensive."

Fitch expects a 40% recovery on the $16.4 million loan.

For previous coverage of this situation, click here.


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