NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed the U.S. residential primary servicer ratings for Specialized Loan Servicing, LLC (SLS) and revised the Rating Outlook to Positive from Stable:
--Primary servicer rating for Prime product at 'RPS2, Outlook to Positive from Stable;
--Primary servicer rating for Alt-A product at 'RPS2', Outlook to Positive from Stable;
--Primary servicer rating for Subprime product at 'RPS2', Outlook to Positive from Stable;
--Primary servicer rating for HELOC product at 'RPS2', Outlook to Positive from Stable;
--Primary servicer rating for Second Lien product at 'RPS2', Outlook to Positive from Stable;
--Special servicer rating at 'RSS2', Outlook to Positive from Stable.
The servicer rating affirmation and Positive Outlook reflect SLS' sustained performance and strong servicing metrics, an improved control environment, technological enhancements, and managed expansion of its servicing portfolio.
The servicer improved its corporate governance structure to include an oversight committee comprised of SLS executive management and senior members from its parent, Computershare. The new framework provides a more independent reporting structure for SLS' established internal audit, legal and compliance departments.
The ratings also take into consideration the expansion of the servicer's portfolio, which has increased due to the on-boarding of legacy distressed portfolios from banks and modest growth of its agency loans portfolio. SLS has applied a disciplined approach to the growth of its portfolio which is reflected in the servicer's ability to maintain strong servicing metrics during its expansion.
While the servicer has executed its strategy to capitalize on its special servicing capabilities, the servicer's model of an asset light, subservicing platform has evolved to include increased purchasing of mortgage servicing rights (MSRs), primarily legacy distressed non-agency RMBS loans from large banks. This strategy has caused SLS to establish financing arrangements to acquire the MSRs and meet advancing responsibilities.
The ratings also take into consideration the financial condition of SLS and its parent both non-rated entities, as financial condition is a component of Fitch's servicer ratings. Computershare is an international data management and transaction processing business active in management transfer, employee equity plans, and other specialized financial, governance and communication services.
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.
SLS is headquartered in Highlands Ranch, CO. As of Sept. 30, 2014, SLS' portfolio comprised approximately 277,000 loans totaling $30 billion. The current portfolio contains approximately 71,000 subprime loans totaling $14.5 billion, 19,500 Alt-A loans totaling $5.1 billion, 41,500 subprime closed-end second liens totaling $1.6 billion, 72,600 HELOC loans totaling $3.7 billion and approximately 72,400 other loans totaling $4.8 billion.
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. 30, 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. 30, 2014);
--'U.S. Residential and Small Balance Commercial Mortgage
Servicer Rating Criteria' (Jan. 30, 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=957519
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