Fitch Places PHH Mortgage Corp's U.S. RMBS Servicer Ratings on Rating Watch Negative

NEW YORK--()--Fitch Ratings has placed the following ratings for PHH Mortgage Corporation (PHH Mortgage) on Rating Watch Negative:

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

--U.S. Residential primary servicer rating for Alt-A product at 'RPS2+;

--U.S. Residential primary servicer rating for specialty sub-servicer product at 'RPS2+';

--U.S. Residential primary servicer rating for HELOC product at 'RPS2+'.

The ratings previously had a Stable Rating Outlook.

The action is based on Fitch's June 4, 2014 downgrade of its parent, PHH Corporation, to 'BB-' from 'BB' and placed on Watch Negative, following the announced sale of Fleet Management Services and the increased credit risk profile of PHH Mortgage operating as a monoline mortgage servicing and origination business. Fitch believes financial condition is an important indication of a servicer's ability to meet its obligations and to fund its operations.

In addition, the rating action takes into consideration, PHH Mortgage's private label business arrangements while it works to diversify and grow its platform in an increasingly regulated environment.

The rating action also considers PHH Mortgage's continued efforts to achieve its corporate governance and oversight objectives with regards to its internal control and reporting responsibilities. Fitch expects to resolve the servicer Rating Watch in conjunction with PHH's financial assessment and through the review of materials expected to be received from PHH Mortgage related to its upcoming full servicer review.

Fitch does not expect to take any rating actions on RMBS bonds serviced by PHH Mortgage following this Rating Watch Negative action.

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

PHH Mortgage is headquartered in Mt. Laurel, NJ with an additional servicing in Amherst, NY As of March 31, 2014, the company primary serviced 769,594 loans totaling $125.1 billion and subserviced 438,458 loans for $100.6 billion for a combined portfolio of 1,208,052 loans totaling $225.7 billion. This includes Prime - 105,847 loans totaling $60.5 billion; Alt-A - 11,728 loans totaling $2.78 billion; HELOC - 80,097 loans totaling $5.5 billion, and 915,063 Agency loans totaling $139.1 billion

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

Rating Criteria for US Residential and Small Balance Commercial Mortgage Servicers

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=731747

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=834574

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Contacts

Fitch Ratings
Primary Analyst
Michael Laidlaw
Director
+1-212-908-0251
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Roelof Slump
Managing Director
+1-212-908-0705
or
Committee Chairperson
Grant Bailey
Managing Director
+1-212-908-0544
or
Sandro Scenga, New York, +1-212-908-0278
sandro.scenga@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
Michael Laidlaw
Director
+1-212-908-0251
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Roelof Slump
Managing Director
+1-212-908-0705
or
Committee Chairperson
Grant Bailey
Managing Director
+1-212-908-0544
or
Sandro Scenga, New York, +1-212-908-0278
sandro.scenga@fitchratings.com