--Residential primary servicer rating for Prime product at 'RPS3', Outlook Negative;
--Residential primary servicer rating for Alt-A product at 'RPS3', Outlook Negative;
--Residential primary servicer rating for Subprime product at 'RPS3', Outlook Negative;
--Residential primary servicer rating for HELOC product at 'RPS3', Outlook Negative;
--Residential primary servicer rating for Closed-end Second Lien product at 'RPS3', Outlook Negative;
--Residential special servicer rating at 'RSS3', Outlook Negative;
--Residential master servicer rating at 'RMS3', Outlook Negative.
The rating affirmations are based on Ocwen's highly integrated technology environment and robust borrower and investor websites. The primary and special servicer rating actions incorporate a number of internal audit findings that had a negative impact on the assessment of the operating areas involved and also reflect Fitch's concerns surrounding Ocwen's high concentration of servicing operations located off-shore. The master servicer rating is based on the established master servicing platform that Ocwen acquired from
The ratings also reflect Fitch's overall concerns for the U.S. residential servicing industry which include Fitch's concerns for the servicers' ability to maintain high performance standards while addressing the rising cost of servicing and the ongoing changes to industry practices being mandated by regulators and other parties.
The Negative Outlook reflects the financial and operational risks associated with Ocwen's aggressive acquisition strategy, high concentration of offshore servicing operations, and potential conflicts of interest with the use of related companies for property valuations, managing real estate owned (REO) and short sales, title services on REO sales, and handling force-placed insurance.
Ocwen acquired the residential primary and special servicing platform previously used by ResCap's
Ocwen's servicing sites are located in
Ocwen's servicing portfolio has grown by more than 300% over the past two years due to sizeable portfolio and servicing business acquisition activity. Ocwen is currently the largest non-bank servicer of residential mortgages in the U.S., and fourth largest residential mortgage servicer overall. As of
The master servicing operation reports into Ocwen's investor reporting department. Since Fitch's prior review, master servicing has reduced the number of on-site reviews it performed in the last 12 months to two which covered 2.9% of the master servicing portfolio by principal balance. At the time of Fitch's prior review, master servicing's on-site reviews covered 97.1% of the portfolio. The company stated this shift was due to master servicing's focus on the integration with Ocwen's primary servicing operation and the transfer of loans from the GMAC Mortgage platform to Ocwen's servicing platform. Fitch will continue to monitor the master servicing platform's ability to maintain its performance as it is integrated into Ocwen's existing servicing infrastructure.
Fitch rates residential mortgage primary, master, and special servicers on a scale of 1 to 5, with 1 being the highest rating. Within some of these rating levels, Fitch further differentiates ratings by plus (+) and minus (-) as well as the flat rating. For more information on Fitch's residential servicer rating program, please see Fitch's report 'Rating U.S. Residential and Small Balance Commercial Mortgage Servicer Rating Criteria', dated
Additional information is available at 'www.fitchratings.com'.
--'Global Rating Criteria for Structured Finance Servicers' (
--'U.S. Residential and Small Balance Commercial Mortgage Servicer Rating Criteria' (
Rating Criteria for US Residential and Small Balance Commercial Mortgage Servicers
Global Rating Criteria for Structured Finance CDOs
Source: Fitch Ratings
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