Fitch Downgrades 7 Classes of LaSalle Small BalanceCMBS Securities 2006-MF3.

NEW YORK -- Fitch Ratings downgrades and assigns distressed recovery ratings to LaSalle Commercial Mortgage Securities, Inc. commercial mortgage pass-through certificates, series 2006-MF3, as follows:

--$3.7 million class E to 'BBB-' from 'BBB';

--$6.8 million class G to 'B+'

--$2.5 million class H to 'B-' from 'BB-';

--$1.9 million class J to 'CCC/DR1' from 'B+';

--$1.2 million class K to 'CCC/DR1' from 'B';

--$2.5 million class L to 'C/DR6' from 'B-';

--$1.2 million class M to 'C/DR6' from 'CCC/DR1'.

Fitch also affirms the following classes:

--$386.8 million class A at 'AAA';

--Interest-only class X at 'AAA';

--$8.0 million class B at 'AA';

--$13.0 million class C at 'A';

--$8.0 million class D at 'BBB+';

--$4.9 million class F at 'BBB-'.

Fitch does not rate the $7.1 million class N certificates.

The downgrades are the result of additional specially serviced loans and increased loss expectations since Fitch's last rating action. Fitch expects losses to ultimately deplete the non-rated class N and negatively impact credit enhancement levels.

As of the February 2008 remittance report, the transaction has been reduced 9.3% to $447.6 million from $493.4 million at issuance. Fitch identified 173 loans (41%) as loans of concern as a result of declines in occupancy and performance as well as the transaction's 23 (6.2%) specially serviced loans.

The largest specially serviced loan (0.8%) is secured by a multifamily property in Lubbock, TX and is 90 days delinquent. The property continues to show declines in occupancy and performance since issuance. The special servicer is proceeding with foreclosure.

The second largest specially serviced loan (0.6%) is secured by a multifamily property in Oklahoma City, OK and is 90 days delinquent. The property is in poor condition with declining performance. The special servicer filed for foreclosure in December 2007 and a receiver was placed at the property in January 2008.

The third largest specially serviced loan (0.4%) is secured by a multifamily property in Tampa, FL and is 90 days delinquent. The property operations have been impacted due to poor management. The special servicer is in the process of proceeding with foreclosure.

Fitch's Distressed Recovery (DR) ratings are designed to estimate recoveries on a forward-looking basis while taking into account the time value of money.

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