MORTGAGE LOAN COMPLIANCE®

Standard & Poor's Ratings Services has lowered its ratings on 37 classes from three residential mortgage-backed securities transactions backed by U.S. prime jumbo loans, alternative-A and subprime credit mortgage collateral issued in 2004 and 2006. S&P also removed 22 of the lowered ratings from CreditWatch with negative implications.

Ambac's ratings by Standard & Poor's Corp. appear relatively steady for now, but continuing residential mortgage-backed securities deterioration held to be largely responsible for the company's second quarter loss of close to $2.4 billion could be a concern going forward.

Standard & Poor's analysts said they have revised their outlook on Ambac Assurance Corp.'s counterparty credit rating to negative from developing and that their outlook for Ambac Financial Group Inc.'s counterparty credit rating remains negative. But they also noted that they continue to consider the outlook for AAC's financial strength rating outlook to be "developing" because they could raise that rating going forward.

"Although cumulative losses were generally low compared with our projected lifetime losses for the transactions reviewed, we are projecting an increase in losses due to increases in delinquencies and the current negative condition of the U.S. housing market," S&P said. In addition to lowering the ratings of 37 classes, S&P affirmed its ratings on 13 classes from the same transactions.

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