BOA has requested that Moody's provide its opinion on whether the ratings on the securities issued by the affected transactions would be downgraded or withdrawn as a result of the transactions having the servicing of some, but not all loans transferred to SPS from BOA by way of sub-servicing. BOA has chosen SPS to sub-service approximately 16,367 loans within the transactions listed below, commencing on November 30, 2012, with additional 527 loans to be transferred to SPS on December 15, 2012. As the sub-servicer, SPS will not own the servicing rights to the loans that are transferred from BOA.
In determining the credit impact of the transfer of servicing to SPS, Moody's reviewed i) SPS's servicing metrics ii) the affected transactions' sensitivity to cash flow disruptions due to changes in servicing and modification practices, and iii) SPS's ability to handle the proposed transfer.
Moody's view is based primarily on its opinion that: a) the ratings of each of the securities in the affected transactions will not have material negative implication following changes in servicing strategy that can occur after the transfer; b) SPS is a stronger servicer than BOA as evidenced by Moody's SQ assessment, and c) SPS is adequately prepared to handle the transfer and continue servicing the loans in the affected transactions listed above. SPS is assessed at SQ2+ as a primary servicer of subprime residential mortgage loans and as a special servicer of residential mortgage loans. BOA is assessed at SQ3+ as a primary servicer of subprime residential mortgage loans and SQ3 as a special servicer of residential mortgage loans. SPS is also assessed higher in the collections, loss mitigation and timeline management subcategories than BOA.
Moody's opinion addresses only the current impact on Moody's ratings, and it does not express an opinion as to whether the transfer of servicing rights has or could have any other effects that investors may or may not view positively.
The methodologies used in assessing the credit impact of the servicing transfer was "Moody's Approach to Rating Residential Mortgage Servicers" published in January 2001, "Updated Moody's Servicer Quality Rating Scale and Definitions" published in May 2005, "Proposal to Update Moody's Approach To Servicer Quality (SQ) Assessment For U.S. Primary Residential Mortgage Servicers" published in July 2012, "Pre-2005 US RMBS Surveillance Methodology" published January 2012, "US RMBS Surveillance Methodology for Scratch and Dent" published in May 2011, and " 2005-2008 US RMBS Surveillance Methodology" published in July 2011. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.
Affected Transactions: Alt-A Collateral GSC Capital Corp.Mortgage Trust 2006-1
GSC Capital Corp.Mortgage Trust 2006-2
Scratch & Dent Collateral
Merrill Lynch Mortgage Investors Trust Series 2006-SD1
CWABS Asset-Backed Certificates Trust 2006-QH2
Merrill Lynch Mortgage Investors, Inc. 2005-WMC1
First Franklin Mortgage Loan Trust 2005-FFH1
Specialty Underwriting and Residential Finance Trust, Series 2005-BC2
First Franklin Mortgage Loan Trust 2005-FF7
Specialty Underwriting and Residential Finance Series 2005-AB2
Merrill Lynch Mortgage Investors Trust 2005-AR1
Specialty Underwriting and Residential Finance 2005-AB3
Specialty Underwriting and Residential Finance Series 2005-BC4
Merrill Lynch Mortgage Investors Trust 2006-WMC1
Merrill Lynch Mortgage Investors Trust Series 2006-HE1
Specialty Underwriting and Residential Finance Series 2006-BC1
Specialty Underwriting and Residential Finance Series 2006-AB1
Merrill Lynch Mortgage Investors Trust 2006-RM1
Specialty Underwriting and Residential Finance 2006-BC2
Merrill Lynch Mortgage Investors Trust 2006-WMC2
Merrill Lynch Mortgage Investors Trust Series 2006-HE2
Merrill Lynch Mortgage Investors Trust 2006-AR1
Specialty Underwriting and Residential Finance Series 2006-AB2
Merrill Lynch Mortgage Investors Trust 2006-RM2
Merrill Lynch Mortgage Investors Trust Series 2006-HE3
Merrill Lynch Mortgage Investors Trust 2006-AHL1
Merrill Lynch Mortgage Investors Trust 2006-FM1
Specialty Underwriting and Residential Finance Series 2006-BC3
Merrill Lynch Mortgage Investors Trust Series 2006-HE4
Specialty Underwriting and Residential Finance 2006-AB3
Merrill Lynch Mortgage Investors Trust 2006-MLN1
Merrill Lynch Mortgage Investors Trust Series 2006-HE6
First Franklin Mortgage Loan Trust 2006-FF18
First Franklin Mortgage Loan Trust 2007-FF1
Merrill Lynch Mortgage Investors Trust, Series 2007-HE1
Specialty Underwriting and Residential Finance Trust, Series 2007-AB1
First Franklin Mortgage Loan Trust Mortgage Loan Asset-Backed Certificates, Series 2007-FF2
Merrill Lynch Mortgage Investors Trust Series 2007-HE2
Merrill Lynch Mortgage Investors Trust 2007-MLN1
Merrill Lynch Mortgage Investors Trust Series 2007-HE3
Merrill Lynch Mortgage Investors Trust 2005-FM1
Specialty Underwriting and Residential Finance Series 2006-BC5
Junil Park Associate Analyst Structured Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Amita Shrivastava VP - Senior Credit Officer Structured Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.
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MIS, a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MIS have, prior to assignment of any rating, agreed to pay to MIS for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Shareholder Relations -- Corporate Governance -- Director and Shareholder Affiliation Policy."
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Notwithstanding the foregoing, credit ratings assigned on and after October 1, 2010 by Moody's Japan K.K. ("MJKK") are MJKK's current opinions of the relative future credit risk of entities, credit commitments, or debt or debt-like securities. In such a case, "MIS" in the foregoing statements shall be deemed to be replaced with "MJKK". MJKK is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO.
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