Fitch Assigns Initial Residential Mortgage Servicer Ratings to BSI Financial Services, Inc.

NEW YORK--()--Fitch Ratings has assigned the following U.S. residential mortgage servicer ratings to BSI Financial Services, Inc. (BSI):

--Initial U.S. residential primary servicer rating for Prime product 'RPS3-'; Outlook Stable;

--Initial U.S. residential special servicer rating 'RSS3-'; Outlook Stable.

The rating actions are based on BSI's residential mortgage servicing experience and adequate servicing technology. However, the ratings also reflect BSI's limited experience in servicing loans in RMBS transactions and the company's developing internal control environment. In addition, the rating incorporates the financial condition of BSI, a non-publicly rated entity, as financial condition is a component of Fitch's servicer ratings.

Finally, the ratings reflect Fitch's overall 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, mandated by regulators and other parties.

BSI was originally formed in 1986. The mortgage servicing operation was acquired by Servis One in 2006 and continues to do business under the name BSI, with two main servicing sites in Irving, TX and Titusville, PA. BSI provides third party, high touch servicing of highly distressed mortgage loans on behalf of private investors, banks, credit unions, and mortgage bankers. The company employs approximately 200 full time equivalent (FTE) staff.

As of May 31, 2013, BSI was servicing over 17,000 residential mortgage loans totaling $2.9 billion. This included approximately 79% first lien mortgages comprising of over 5,500 government-sponsored entities (GSE) product and over 8,200 non-agency mortgage loans. Additionally, 21% of the portfolio comprises second lien mortgages which are primarily of closed end loans.

Fitch recently completed its operational review of BSI's servicing operations and while Fitch believes the company has a capable servicing platform with the capacity and infrastructure for its current servicing portfolio, Fitch believes the company will need to strengthen certain areas of the platform as it positions itself for servicing non-agency RMBS rated transactions. These areas include investor reporting, customer service, collections, foreclosure, REO and internal audit. Fitch will continue to monitor the company's development of these areas as it pursues its servicing initiatives.

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 Jan. 31, 2011, which is available on the Fitch Ratings web site at 'www.fitchratings.com'.

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

Applicable Criteria and Related Research:

--'Rating Criteria for Structured Finance Servicers' (Feb. 6, 2013);

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

Applicable Criteria and Related Research:

Rating Criteria for Structured Finance Servicers

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=699690

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

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=802175

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Contacts

Fitch Ratings
Primary Analyst
Natasha Hanson, +1-212-908-0272
Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Diane Pendley, +1-212-908-0777
Managing Director
or
Committee Chairperson
Roelof Slump, +1-212-908-0705
Managing Director
or
Media Relations
Sandro Scenga, New York, +1-212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Natasha Hanson, +1-212-908-0272
Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Diane Pendley, +1-212-908-0777
Managing Director
or
Committee Chairperson
Roelof Slump, +1-212-908-0705
Managing Director
or
Media Relations
Sandro Scenga, New York, +1-212-908-0278
sandro.scenga@fitchratings.com