Diane Lans, senior director at the firm, notes that the findingshould provide comfort to CMBS investors. "Fitch first found thatonly 1.02% of CMBS conduit loans defaulted, and further analysisthen revealed that the losses related to these defaults were low,"she says in prepared statement. She also warns, however, that theaverage loss percentage is expected to rise over time as the realestate markets continue to weaken and as more recent defaults areworked out.

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In nearly half the cases, defaulted multifamily loans camecurrent or were paid in full, despite the reputation thesesecurities have for high rates of default. "However, almost all thedefaulted health care loans--a stunning 91%--are still with thespecial server and stymied by bankruptcy, have foreclosures pendingor are REO and cannot be disposed," Lans says.

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The report, Dissecting Defaults and Losses: Part II: 2001 CMBSConduit Loan Default Study, stresses that time is most theimportant factor in affecting the amount of loss. If an asset canbe worked out quickly, losses can be reduced. The complete reportis available to subscribers at www.fitchratings.com. A conferencecall will discuss the results of the study on Wednesday Aug. 5 at2:00 pm Eastern time. Those wishing to participate should call(800) 230-1096 five minute ahead of time and will need to know thename of the call leader, Diane Lans.

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