Last week Fitch Ratings downgraded Farringdon Mortgages 1, a U.K. nonconforming RMBS transaction (ASR, 04/24/06). The rating agency said this was the first downgrade on record for the sector.

The single-A, triple-B and double-B rated notes were lowered to single-A minus, triple-B minus and single-B, respectively. The ratings actions result from a high level of arrears and expenses in the deal that culminated in a reserve fund draw for FM1 in April 2006. The draw, a total of GBP216,187 ($404,555), represented 15.76% of the available first loss and took the reserve fund below the level it was at closing. Fitch's analysis factored in revised assumptions on delinquency and expenses.

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