Fitch Places Green Tree Servicing LLC's U.S. RMBS Servicer Ratings on Rating Watch Negative

NEW YORK--()--Fitch Ratings has taken the following actions on the U.S. residential primary servicer ratings for Green Tree Servicing LLC (Green Tree):

--U.S. Residential primary servicer rating for prime product at 'RPS2+'; on Rating Watch Negative;

--U.S. Residential primary servicer rating for subprime product at 'RPS2+; on Rating Watch Negative;

--U.S. Residential primary servicer rating for HLTV product at 'RPS2+'; on Rating Watch Negative;

--U.S. Residential primary servicer rating for HELOC product at 'RPS2+'; on Rating Watch Negative;

--U.S. Residential primary servicer rating for second lien product at 'RPS2+'; on Rating Watch Negative;

--Special servicer rating at 'RSS2+'; on Rating Watch Negative.

The Negative Watch reflects Fitch's ongoing concerns with Green Tree's rapid growth and portfolio integration. Fitch also believes that the recently failed metrics of the National Mortgage Settlement (NMS) as reported on May 14 by the Office of Mortgage Settlement Oversight (OSMO) indicates some procedures and controls challenges in its servicing of the recently acquired Residential Capital LLC (ResCap) loans.

On April 9, 2014, Fitch assigned Green Tree a Negative Outlook, based on their significant growth, elevated servicing metrics, and integration of two impending mortgage servicing rights acquisitions. Fitch expects highly rated servicers to identify and resolve potential issues quickly and to integrate transferred portfolios as seamlessly as possible.

Green Tree became subject to oversight by the OSMO and compliance with the NMS in connection with its mortgage servicing rights purchase (MSR) in 2013 of 380,000 Fannie Mae loans from the former ResCap. While Green Tree's management had indicated to Fitch earlier that the 300 NMS standards had been implemented, the aggressive timing of the integration of the NMS testing requirements for the ResCap portfolio may have contributed to their resultant failures. As of April 2014, approximately 14% of Green Tree's portfolio is subject to OSMO oversight.

The Rating Watch Negative indicates that there is a heightened probability of a rating change and the likely direction of such a change.

As of March 31, 2014, Green Tree's servicing portfolio consisted of 1,872,759 loans with an unpaid principal balance (UPB) of approximately $196 billion. The portfolio, by loan count, is composed of 65% agency product (including prime), 16% manufactured housing product, 13% closed-end second product, 5% subprime product, and 1% HELOC and High Loan to Value. The portfolio by UPB is composed of 86% agency product (including prime), 5% manufactured housing product, 4% closed-end second product, 5% subprime product and less than 1% HELOC and High Loan to Value.

Green Tree's corporate headquarters are located in St. Paul, MN. The company has a total of five servicing locations including Rapid City, SD; Fort Worth, TX; Irving, TX; Tempe, AZ; and Jacksonville, FL. Green Tree also maintains 18 regional offices.

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, 2014 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' (Jan. 31, 2014);

--'U.S. Residential and Small Balance Commercial Mortgage Servicer Rating Criteria' (Jan. 31, 2014).

Applicable Criteria and Related Research:

Rating Criteria for Structured Finance Servicers

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=731750

U.S. Residential and Small Balance Commercial Mortgage Servicer Rating Criteria -- Effective January 31, 2011 to January 30, 2014

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=832760

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Contacts

Fitch Ratings
Primary Analyst
Natasha Hanson
Director
+1-212-908-0272
Fitch Ratings, Inc.
33 Whitehall St.
New York, NY 10004
or
Secondary Analyst
Roelof Slump
Managing Director
+1-212-908-0705
or
Committee Chairperson
Suzanne Mistretta
Managing Director
+1-212-908-0639
or
Meida Relations
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

Sharing

Contacts

Fitch Ratings
Primary Analyst
Natasha Hanson
Director
+1-212-908-0272
Fitch Ratings, Inc.
33 Whitehall St.
New York, NY 10004
or
Secondary Analyst
Roelof Slump
Managing Director
+1-212-908-0705
or
Committee Chairperson
Suzanne Mistretta
Managing Director
+1-212-908-0639
or
Meida Relations
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com