NEW YORK--()--Fitch Ratings is monitoring Nationstar Mortgage LLC's (Nationstar) servicer ratings following the announcement by Bank of America (BOA) on Jan. 7, 2013 that it plans sell to the company mortgage servicing rights (MSRs) on approximately 1.3 million residential loans totaling $215 billion. Loan transfers are expected to occur in multiple stages and to be completed by the end of the third quarter 2013. Given the scale of the announced BOA transaction as well as the on-going integration of Aurora Bank FSB's (Aurora) servicing assets at Nationstar, Fitch is in active dialogue with the company to assess how the acquisition of MSRs from BOA will be managed from both a timing and resources standpoint.
At this time, Fitch does not believe the BOA transactions will impact Nationstar's existing servicer ratings as existing ratings already reflect Nationstar's capacity planning including staffing needs. However, Fitch will closely monitor the loan transfers and subsequent performance to determine any impact on Nationstar's servicer ratings. A significant deterioration in operational capability or portfolio performance at the company could result in a servicer rating downgrade or rating watch.
Fitch currently rates Nationstar 'RPS2' for primary servicer of subprime and Alt-A product, and 'RSS2' for special servicer, all with a Stable Rating Outlook. Nationstar recently completed its acquisition of Aurora's residential mortgage servicing platform and assets, and integration of the former Aurora servicing sites in Scottsbluff NE, Indianapolis IN, and Littleton CO. The Aurora acquisition gave Nationstar increased capacity to grow its servicing portfolio. Nationstar is looking to leverage its existing capacity and infrastructure as well as expand into new markets, possibly leveraging existing BOA resources.
As of Sept. 30, 2012, Nationstar's servicing portfolio was comprised of over 1.1 million loans totaling $198 billion. The servicing portfolio included over 247,000 first and second lien subprime loans totaling $56 billion and 43,000 Alt-A loans totaling $11.4 billion, with over 270,000 loans totaling $46.8 billion in special servicing. The MSR acquisition from BOA is expected to increase Nationstar's servicing portfolio by approximately 100% over the course of 2013.
Additional information is available at 'www.fitchratings.com'.