NEW YORK--()--Fitch Ratings has placed Ocwen Loan Servicing, LLC's (Ocwen) U.S. residential mortgage servicer ratings on Rating Watch Negative, removing the Stable Outlook, as follows:
--Primary servicer rating for Subprime product 'RPS3';
--Residential special servicer rating 'RSS3'.
The Rating Watch Negative is based on concerns arising from the potential acquisition of Homeward Residential (Homeward), which was announced on Oct. 3, 2012 and is expected to close by year end 2012. These concerns reflect portfolio integration risk including loan transfers onto a new system of record and default management platform, time required for management involvement in planning, and execution of transfer and the assimilation of additional subprime and Alt-A loans requiring immediate high-touch efforts. The acquisition of the Homeward platform would increase Ocwen's portfolio by approximately 60%.
As of June 30, 2012 Ocwen's portfolio comprised of 789,712 residential loans with an UPB of $122.5 billion of which 81% are non-agency RMBS transactions. This includes approximately 76% of the portfolio consisting of subprime loans.
As of June 30 2012, Homeward's portfolio comprised of 410,713 loans with an unpaid principal balance (UPB) of $74.1 billion of which 77% are non-agency RMBS transactions. This includes approximately 31% and 37% of the portfolio consisting of subprime and Alt-A loans, respectively.
In addition to the rating actions on Ocwen's servicer ratings, further rating action may be taken on outstanding RMBS transactions currently serviced by Ocwen. Fitch will continue to monitor the acquisition and perform further analysis to determine the final ratings impact on the affected bonds.
The U.S. Residential Mortgage Servicer ratings sector remains on Negative Outlook. On Nov. 4, 2010, Fitch assigned a Negative Outlook for the entire U.S. Residential Mortgage Servicer ratings sector on increased concerns surrounding alleged procedural defects in the judicial foreclosure process. 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 'U.S. Residential and Small Balance Commercial Mortgage Servicer Rating Criteria,' dated Jan. 31, 2011, and 'Global Rating Criteria for Structured Finance Servicers,' dated Aug. 16, 2010, both available on the Fitch's Web site at www.fitchratings.com.
Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria & Related Research:
--'U.S. Residential and Small Balance Commercial Mortgage Servicer Rating Criteria' (Jan. 31, 2011);
--'Global Rating Criteria for Structured Finance Servicers' (Aug. 16, 2010).
Applicable Criteria and Related Research:
Global Rating Criteria for Structured Finance Servicers
U.S. Residential and Small Balance Commercial Mortgage Servicer Rating Criteria