Fitch Upgrades Chase's U.S. RMBS Servicer Rating For Prime Product

NEW YORK--()--28 October 2016: Fitch Ratings has taken the following actions on the U.S. RMBS servicer ratings for JPMorgan Chase Bank, NA (Chase):

--Residential primary servicer rating for Prime product upgraded to 'RPS1-' from 'RPS2+'; Outlook Stable;

--Residential primary servicer rating for Alt-A product affirmed at 'RPS2+'; Outlook Stable;

--Residential primary servicer rating for Subprime product affirmed at 'RPS2+'; Outlook Stable;

--Residential primary servicer rating for HELOC product affirmed at 'RPS2+'; Outlook Stable;

--Residential primary specialty servicer rating for Second Lien product affirmed at 'RPS2+'; Outlook Stable;

--Residential primary specialty servicer rating for Option ARM product affirmed at 'RPS2+'; Outlook Stable;

--Residential special servicer affirmed at 'RSS2+'; Outlook Stable;

--Residential master servicer affirmed at 'RMS2'; Outlook Stable.

The upgrade of the primary servicer of Prime product rating reflects enhancements to Chase's servicing operations that are focused on improving the customer experience and increasing efficiencies. The upgrade, as well as the affirmation of the other Primary and Special servicer ratings and Stable Rating Outlook, reflects operational improvements, technology enhancements, continued progress on regulatory settlements, and consistent internal audit and Regulation AB (Reg AB) results.

The affirmation of the master servicer rating and Stable Outlook reflect the company's established master servicing operation, continued support for the platform, consistent Reg AB and USAP results, and Fitch's observations regarding portfolio runoff.

All of the servicer ratings incorporate the company's financial condition. Chase is rated 'AA-' with a Stable Outlook by Fitch. A company's financial condition is a component of Fitch's servicer rating analysis.

Enhancements to Chase's servicing operations during the current review period included improved capacity planning to optimize customer communication channels leveraging multi-function specialists, streamlined processing of correspondence, and proactive monitoring of customer inquiries to identify complaints. Chase also expanded its use of scripting to increase the efficiency of processing payment exceptions. In addition, Chase developed and implemented a new platform for the management of its third party oversight program, and migrated the management of third party providers to the new platform.

Chase continues to make progress on regulatory settlements entered into over the past several years. In January 2016, the OCC terminated the mortgage servicing-related consent order against Chase, and in September 2016, the RMBS Settlement Monitor released its final report regarding Chase's compliance with the settlement.

Chase's internal audit reports continue to show an improving trend, with the number of significant findings remaining low. In addition, in Chase's most recent Reg AB report, the number of instances of material noncompliance for the primary and special servicing platform remained at one, which is consistent with the prior review. The most recent USAP report did not contain any instances of non-compliance.

Chase's servicing operations are headquartered in Columbus OH, with additional servicing sites in Dallas, Phoenix, Monroe, LA and Jacksonville, FL and a captive site in Manila, the Philippines. As of June 30, 2016, Chase's primary and special servicing portfolio was comprised of more than 5.7 million loans totaling $881.3 billion.

Washington Mutual Mortgage Securities Corp. (WMMSC), a subsidiary of Chase, continues to be the legal entity overseeing Chase's master servicing activities. WMMSC has been operating for more than 38 years, including several predecessor entities that Chase acquired from Washington Mutual Bank (WaMu) and EMC Mortgage. Chase is leveraging the master servicing operation in its oversight of two subservicers. The most recent Reg AB and USAP reports for the master servicing operation did not contain any instances of material non-compliance, which is consistent with the prior review.

WMMSC's portfolio continues to decrease, with no loans expected to be added to the platform to offset runoff. As of June 30, 2016, WMMSC's portfolio was comprised of approximately 23,700 loans totaling $7 billion, a decrease of 8.5% in loan count from 25,900 loans totaling $8 billion as of June 30, 2015. Fitch is concerned that as the portfolio continues to decline and with limited opportunities for new master servicing assignments due to low RMBS issuance, WMMSC may not continue to provide timely updates to its systems and processes with operational enhancements that incorporate industry changes.

Fitch believes that Chase has capable primary, special, and master servicing operations with the staff, procedures, controls, default management processes, and technology to manage its current servicing portfolio.

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 April 23, 2015 which is available on the Fitch Ratings web site at 'www.fitchratings.com'.

Additional information is available at 'www.fitchratings.com'.

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Contacts

Fitch Ratings
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Thomas Crowe
Senior Director
+1-212-908-0227
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Natasha Aikins
Director
+1-212-908-0272
or
Committee Chairperson
Roelof Slump
Managing Director
+1-212-908-0705
or
Media Relations
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Thomas Crowe
Senior Director
+1-212-908-0227
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Natasha Aikins
Director
+1-212-908-0272
or
Committee Chairperson
Roelof Slump
Managing Director
+1-212-908-0705
or
Media Relations
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com