NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed the following U.S. residential servicer ratings for CitiMortgage, Inc. (CMI):
--U.S. Residential primary servicer rating for prime product at 'RPS2+', Outlook Stable;
--U.S. Residential master servicer rating at 'RMS2+', Outlook Stable.
The affirmation of the primary servicer rating and Stable Outlook reflect CMI's comprehensive internal control environment, sustained improvement in audit results, and management and staffing turnover. The affirmation of the master servicer rating and Stable Outlook reflect CMI's established master servicing platform, improvement in Regulation AB (Reg AB) results, and the management and reporting structure transition.
Both of the servicer ratings incorporate CMI's increased focus on operational efficiency, and the company's financial condition. CMI's parent, CitiBank, NA (CBNA) is rated 'A+'/Stable Outlook by Fitch. A company's financial condition is a component of Fitch's servicer rating analysis.
CMI is headquartered in O'Fallon, MO, with multiple servicing sites in the U.S. and affiliate and third-party vendor sites in the Philippines, India and Guatemala. The master servicing operation is located in Irving, TX. Off-shore affiliate and vendor sites handle a significant portion of customer service and front-end collection calls in the Philippines and Guatemala, and back-office functions in India.
As of Sept. 30, 2016, CMI was primary servicing over 1.5 million loans totaling $247.6 billion and master servicing more than 59,000 loans totaling $14.4 billion. The primary servicing portfolio, which included approximately 218,000 non-agency prime loans totaling $63.7 billion, continues to decrease through strategic asset sales of mortgage servicing rights (MSR) and whole loans. The master servicing portfolio includes legacy RMBS transactions as well as new master servicing assignments including several Redwood Trust issued Sequoia residential mortgage pass-thru certificates.
CMI has a strong institutional framework for compliance and control utilizing its "three lines of defense" incorporating quality assurance (QA) and quality control (QC) as the first line; independent control functions as the second line, and internal audit as the third line. Since Fitch's prior review, QA transitioned to a risk based approach and continued its implementation of risk ratings for specific defects identified for each test.
CMI has sustained improvement in audit results. Internal audit reports reviewed by Fitch for the current review period contained a relatively low number of significant findings. In addition, CMI's most recent Reg AB report for the year ended Dec. 31, 2015 contained no instances of material noncompliance for either the primary or master servicing operations. In the prior review period, master servicing had a separately issued Reg AB report that contained two instances of material non-compliance.
Since Fitch's prior review, CMI's chief operating officer and managing director of servicing both left the company. In addition, master servicing was integrated into CMI's primary servicing investor operation in connection with the departure of the former head of master servicing. During the current review period, CMI experienced significantly higher turnover and utilization of temporary or contract workers in its servicing operations.
CMI has increased its focus on operational efficiency in both primary and master servicing. Since Fitch's prior review, the primary servicing operation outsourced its high speed lockbox payment processing to TransCentra and transitioned REO management to a vendor model utilizing three asset management companies. The master servicing operation implemented a new risk based approach to servicer oversight that is expected to reduce the number of annual on-site servicer reviews. CMI also implemented several technology projects to increase efficiency and further the integration of master servicing into the primary servicing operation.
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 Criteria for U.S. Residential and Small Balance Commercial Mortgage Servicers', 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.
Additional Disclosures
Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1016585
Endorsement Policy
https://www.fitchratings.com/regulatory
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTPS://WWW.FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.
Copyright © 2016 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed.
The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers.
For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001