Fitch Affirms PNC Mortgage's U.S. RMBS Servicer Ratings; Revises Outlook to Stable

NEW YORK--()--Fitch Ratings has affirmed the following U.S. residential primary servicer ratings for PNC Mortgage, division of PNC Bank National Association (PNC):

--Primary servicer rating for prime product at 'RPS2';

--Primary servicer rating for Alt-A product at 'RPS2';

The Rating Outlook has been revised to Stable from Positive.

The affirmation of the 'RPS2' rating demonstrates PNC's strong operating history, financial resources as a division of PNC Bank N.A, and demonstrated expertise in servicing operations. The revised Outlook to Stable takes into account the servicer's internal audit findings, pending regulatory reviews and challenges of executing its long term growth strategy.

While Fitch notes the overall improvement in PNC's risk control environment, several operational units had a number of internal audit findings, including some which were rated high risk. At the time of Fitch's on site review, many of the findings had been addressed by management with respective action plans. However, the findings were considered in Fitch's analysis of the operational areas involved.

PNC was one of 13 mortgage servicers that the Office of Comptroller of Currency (OCC) and the Federal Reserve Board issued enforcement actions against for deficiencies in its mortgage loan servicing and foreclosure operations. The servicer has since responded by instituting remedial actions and made material changes to its loss mitigation and foreclosure platform in an effort to meet the new compliance requirements. PNC is awaiting its final report from the OCC regarding the servicer's consent order initiatives. Fitch will monitor the final determination by the OCC, Federal Reserve, or other regulatory bodies.

Finally, the ratings reflect Fitch's overall concerns for the U.S. residential servicing industry which include Fitch's concerns for the servicers' ability to maintain high performance standards while addressing the rising cost of servicing and the ongoing changes to industry practices being mandated by regulators and other parties.

As of June 30, 2014, PNC's servicing portfolio consisted of 838,932 loans with an unpaid principal balance of $123.4 billion. The portfolio included 117,321 prime loans for approximately $22.1 billion; 20,820 Alt-A loans for approximately $3.8 billion; 697,192 Agency loans for approximately $97.1 billion; 3,560 prime second liens for approximately $185.3 million; 39 subprime loans for approximately $6.1 million.

PNC's mortgage servicing operations are headquartered in Miamisburg, OH with a second servicing site in Jacksonville, FL. The Jacksonville site contains redundant collections, loss mitigation, and customer service functions. PNC Mortgage is a division of PNC Bank N.A which has a Fitch rating of 'A+' with a Stable Outlook.

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:

--'Global 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=840522

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Contacts

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

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Contacts

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