News Column

Fitch Affirms Select Portfolio Servicing's U.S. RMBS Servicer Ratings

June 2, 2014

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed the following U.S. residential primary and special servicer ratings for Select Portfolio Servicing (SPS):

--U.S. Residential primary servicer rating for Alt-A product at 'RPS1-'; Outlook Stable;

--U.S. Residential primary servicer rating for Subprime product at 'RPS1-'; Outlook Stable;

--U.S. Residential primary specialty servicer rating for Closed-End Second Liens product at 'RPS1-'; Outlook Stable;

--U.S. Residential special servicer rating at 'RSS1-'; Outlook Stable.

SPS has been servicing residential loans for more than 25 years and RMBS transactions for 14 years. SPS is wholly owned by Credit Suisse Group, AG. The servicer does not originate or purchase loans but provides servicing for third parties while acting as a key component of Credit Suisse's residential mortgage conduit. The servicer also acquires special servicing and seasoned portfolios from underperforming servicers.

The servicer rating affirmations and Stable Rating Outlook reflect SPS' strong loss mitigation and effective pre-foreclosure sale resolutions. The ratings also take into consideration SPS' process for identifying and completing targeted solutions based on the customers' ability and willingness to pay. SPS evidences a strong compliance structure, including its enhanced internal control processes and procedures. The servicer continues to utilize its proprietary loss mitigation systems in maintaining and improving performance in most products.

SPS has been acquiring more severely delinquent loans, with some loans having limited or no customer contact from the previous servicers. However, the servicer experienced material improvements in abandonment rates and average hold times for both customer service and collection accounts. SPS explained that the improvements were due to its closer monitoring and increased staffing to maintain metrics above performance levels.

In addition, SPS indicated that it increased its existing controls in the loan boarding and default management areas to reconcile and confirm that all loss mitigation loans in transition are accurate prior to boarding. Fitch believes that this process will reduce delays in reconciling loss mitigation cases that occur during the transfer of servicing.

SPS continues to make enhancements to its regulatory environment by realigning the client and contractual compliance teams under its internal audit group and added experienced auditors to meet its increased monthly process and control reviews. The servicer maintains highly developed internal and external audit control processes with oversight by its executive management team and its parent. The servicer indicated that it is under no regulatory oversight and was in full compliance with its 2013 Reg. AB Requirements.

As of March 31, 2014, SPS primary serviced 383,339 loans totaling $80.4 billion. The portfolio is broken down by rated products and includes the following: 337,848 subprime loans totaling $70.04 billion; 19,699 Alt-A loans totaling $8.60 billion; 18,385 Closed-end second lien loans totaling $678.15 million and the special servicing portfolio consisted of 43,337 loans totaling $6.57 billion.

The servicer has its main servicing location in Salt Lake City, UT with an additional servicing site in Jacksonville, FL. SPS does not offshore any of its customer contact functions and no single function performed by the servicing platform is 100% outsourced.

Fitch will continue to monitor SPS while it manages growth and rising costs in a highly regulated environment

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Rating Criteria for Structured Finance Servicers', Jan. 30, 2014;

--'Rating U.S. Residential and Small Balance Commercial Mortgage Servicer Rating Criteria', dated Jan. 31, 2014.

Applicable Criteria and Related Research:

Rating Criteria for Structured Finance Servicers

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=731750

U.S. Residential and Small Balance Commercial Mortgage Servicer Rating Criteria -- Effective January 31, 2011 to January 30, 2014

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=600065

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=832560

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.



Fitch Ratings

Primary Analyst

Michael Laidlaw

Director

+1-212-908-0251

Fitch Ratings, Inc.

33 Whitehall St.

New York, NY 10004

or

Secondary Analyst

Roelof Slump

Managing Director

+1-212-908-0705

or

Committee Chairperson

Grant Bailey

Managing Director

+1-212-908-0544

or

Media Relations

Sandro Scenga, +1 212-908-0278


Source: Fitch Ratings


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