While a servicing downgrade does not necessarily indicate portfolio deterioration, systematic delinquencies and defaults in Franchise Mortgage Acceptance Corp.'s asset-backed securities are driving up the industry's weighted averages, creating what some participants are calling a "black cloud" over the franchise asset-backed securities market.

"I think the black cloud may be somewhat overstated," said one investment banker who works with franchise ABS. "Clearly there's a black cloud over FMAC, but I think people in the sector are trying to do their best to differentiate between what FMAC is doing and what others are doing."

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