Fitch Affirms Wells Fargo's Primary Resi Servicer Ratings; Assigns Stable Outlook

NEW YORK--()--Fitch Ratings takes the following rating actions on the U.S. residential primary servicer ratings for Wells Fargo Home Mortgage (WFHM), a division of Wells Fargo Bank, N.A., and assigns them a Stable Rating Outlook:

--Residential primary servicer rating for Prime product affirmed at 'RPS1-' Outlook Stable;

--Residential primary servicer rating for Alt-A product affirmed at 'RPS1-' Outlook Stable;

--Residential primary servicer rating for Subprime product affirmed at 'RPS1-' Outlook Stable.

WFHM's servicer ratings affirmation and assignment of a Stable Outlook reflect the continued enhancements to operational risk and expanded procedural controls that were implemented during the year. In addition, WFHM rolled out new-hire training and annual certification programs for its single point of contact representatives while developing management reports and measures for the performance monitoring and incentive programs.

The ratings also reflect the ongoing realignment of various servicing operations and continued internal promotions and key additions to the senior management team.

In addition, the ratings reflect the financial strength of its ultimate parent: Wells Fargo & Company (WFC), rated 'AA-' with a Stable Outlook by Fitch.

WFHM is under signed Consent Orders with both the Federal Reserve and the Office of the Comptroller of the Currency and the respective attorneys general. The servicer continued making operational changes to adhere to the new regulations through the various oversight agencies and attorneys' general settlement. The servicer was one of five servicers to agree with the April 2012 settlement that saw the total sum of $25 billion set aside to provide consumer relief, refinance, and foreclosure assistance programs. The programs will remain in effect for three and a half years and will be subject to a trailing review period.

Further, the rating reflects Fitch's overall continued concerns for the U.S. residential servicing industry, which include the ability to maintain high performance standards while addressing the rising cost of servicing and changes to industry practices, which are likely to be further mandated by regulators and other parties

WFHM is headquartered in Des Moines, IA operating eight servicing/customer centers and nine specialized loss mitigation centers throughout the U.S. As of Aug. 30, 2012, WFHM serviced 9,460,335 loans totaling $1.66 trillion, including approximately 8.08 million agency loans totaling $1.33 trillion, 735,614 prime loans totaling $229 billion, 17,490 Alt-A loans totaling $4.6 billion and 109,976 subprime loans totaling $16.1 billion. In addition, WFHM serviced 515,000 other loans comprised of manufactured housing (MH) and community reinvestment act (CRA), third-party servicing and second liens totaling $80.5 billion.

In June 2011, Fitch downgraded the operational risk ratings of several residential mortgage servicers amidst the growing burden of managing delinquent and defaulted mortgages in an environment of heightened regulatory scrutiny. The increased areas of risk identified by various regulatory bodies ultimately resulted in consent decrees and, the slower than expected pace that institutions have demonstrated in responding to the foreclosure crisis and implementing process changes. WFHM's primary servicer ratings were among those downgraded.

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 and Related Research:

--'Rating U.S. Residential and Small Balance Commercial Mortgage Servicer Rating Criteria', dated Jan. 31, 2011.

Applicable Criteria and Related Research:

U.S. Residential and Small Balance Commercial Mortgage Servicer Rating Criteria

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

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.

Contacts

Fitch Ratings
Primary Analyst
Michael Laidlaw, +1-212-908-0251
Director
One State Street Plaza
New York, N.Y. 10004
or
Secondary Analyst
Diane Pendley, +1-212-908-0777
Managing Director
or
Chairperson
Grant Bailey, +212-908-0544
Managing Director
or
Media Relations
Sandro Scenga, New York, +1 212-908-0278
sandro.scenga@fitchratings.com

Sharing

Contacts

Fitch Ratings
Primary Analyst
Michael Laidlaw, +1-212-908-0251
Director
One State Street Plaza
New York, N.Y. 10004
or
Secondary Analyst
Diane Pendley, +1-212-908-0777
Managing Director
or
Chairperson
Grant Bailey, +212-908-0544
Managing Director
or
Media Relations
Sandro Scenga, New York, +1 212-908-0278
sandro.scenga@fitchratings.com