Fitch Affirms Carrington Mortgage Services, LLC's U.S. RMBS Servicer Ratings; Outlook Stable

NEW YORK--()--Fitch Ratings has affirmed the U.S. residential primary servicer ratings for Carrington Mortgage Services, LLC (Carrington) with a Stable Outlook as follows:

--U.S. residential primary servicer rating for subprime product at 'RPS3'; Outlook Stable;

--Special servicer rating at 'RSS3'; Outlook Stable.

The rating affirmation and Stable Outlook reflects Carrington's high touch servicing model; improved internal controls in keeping pace with the regulatory environment; enhanced technology supporting key business initiatives; and evolving portfolio profile.

In addition, the ratings also take into consideration the financial condition of Carrington, a non-rated Fitch entity, as financial condition is a component of Fitch's servicer ratings.

Fitch believes that Carrington continues to maintain a capable servicing operation with the staff, procedures and controls, default management processes, and technology to manage its current servicing portfolio. However, management indicated it anticipates the portfolio growing substantially in 2014 as it boards over 100,000 loans. While Fitch believes management has the necessary plans regarding staffing, training, and oversight, Fitch will monitor CMS' integration of the portfolios and any effect to performance as it pursues its servicing initiatives.

Finally, the ratings also 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.

Carrington operates its servicing platform from Santa Ana, CA and Fishers, IN with a total of 355 full-time equivalent (FTE) servicing employees at the time of Fitch's review. As of Sept. 30, 2013, Carrington serviced over 68,000 loans totaling $12.5 billion comprised mostly of 1st and 2nd lien subprime loans. The portfolio included approximately 54,700 primary serviced loans and 14,000 special serviced loans.

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:

--'Global 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:

Global Rating Criteria for Structured Finance CDOs

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=718027

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=812899

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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
Roelof Slump, +1 212-908-0705
Managing Director
or
Committee Chairperson
Vanessa Purwin, +1 212-908-0269
Senior Director
or
Media Relations:
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com

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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
Roelof Slump, +1 212-908-0705
Managing Director
or
Committee Chairperson
Vanessa Purwin, +1 212-908-0269
Senior Director
or
Media Relations:
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com