Fitch Ratings predicted higher delinquencies and more ratings downgrades for the home-equty ABS sector in 2007 than in 2006, pointing to slower home price appreciation and a rash of rate resets for later vintage borrowers.

Rating agency representatives, speaking during a conference call yesterday regarding HEL performance, also noted that ACC Capital Corp.'s servicing operations were on watch due to potential financial difficulty at the parent company, stemming in part from a legal settlement related to the subprime lender's lending practices, along with subsequent plans to restructure its retail operations.

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