Countrywide home loan reo

NEW YORK -- Fitch Ratings affirms Countrywide Home Loans, Inc.'s (Countrywide) 'RPS1' residential primary servicer ratings for prime, subprime, and alt-A products and its 'RSS1' special servicer rating. In addition, Fitch also affirms Countrywide's master servicer rating at 'RMS2+'.

The primary servicer ratings are based on Countrywide's seasoned, tenured management; sophisticated, integrated technology; and robust leadership and training programs. The special servicer rating is based on the company's ability to effectively manage and liquidate nonperforming residential mortgage loans and real estate owned (REO). The master servicer rating reflects the company's capable management team, strong investor reporting practices, and its demonstrated ability to effectively monitor the loan accounting, investor reporting, and default management activities of its primary and special servicers. All of the ratings reflect the financial strength of the Countrywide organization, which is rated 'A' by Fitch.

Headquartered in Simi Valley, CA, Countrywide operates four servicing centers located in Simi Valley, CA, Lancaster, CA, Plano, TX, and Ft. Worth, TX. As of June 30, 2004, Countrywide was the second largest servicer in the U.S., servicing over 5.5 million loans with an outstanding principal balance in excess of $722 billion, of which, approximately $588 billion was prime, $56.4 billion was subprime, and $32.2 billion was alt-A product.

Over the past year, Countrywide's corporate governance has continued to strengthen the company's risk management practices, corporate compliance, and internal controls, emphasizing critical servicing functions and improved quality control. Furthermore, the company has enhanced its customer service practices, intensified its technology platform and reinforced its already robust training and leadership development programs. Countrywide is in the process of expanding its master servicing operations and investor reporting area to create redundant functions to support disaster recovery procedures and to leverage operations to support its growth initiatives.

Fitch has reviewed the company's servicing operations and believes that Countrywide has the appropriate staff, default procedures, and controls in place to manage its growth initiatives while maintaining performance. Fitch will continue to closely monitor the company's capable management of its business expansion plans and the effect on its multiple servicing locations.

Fitch rates residential mortgage primary, master, and special servicers on a scale of 1 to 5, with 1 being the highest rating. Within each of these rating levels, Fitch further differentiates ratings by plus (+) and minus (-), as well as the flat rating. For more information on Fitch's residential servicer rating program, see Fitch's report 'Residential Mortgage Servicer Ratings,' dated Feb. 21, 2003, available on Fitch Ratings web site at 'www.fitchratings.com'.