With the increase in option ARM, or negative amortization loan, securitizations, rating agencies are starting to take a harsher look at these loans as evidenced by Fitch Ratings and Standard & Poor's revising enhancement criteria on these mortgages last week. These concerns also hit the mainstream press last Wednesday with the Wall Street Journal publishing an article on the same subject.

Aside from looking at the usual borrower characteristics - such as FICO scores, LTVs and the purpose of the mortgage - Fitch will be looking more closely at three key attributes: the teaser rate, the Index on which the loan's monthly adjustment is based (COFI, MTA or Libor), and the negative amortization balance cap.

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