Fitch Resolves Rating Watch Negative on Nationstar Serviced U.S. RMBS
NEW YORK--(BUSINESS WIRE)--Fitch Ratings has resolved the Rating Watch Negative on 46 U.S. RMBS classes serviced by Nationstar Mortgage (Nationstar). Six classes were downgraded and placed on Outlook Stable and the remaining 40 classes were affirmed and placed on Outlook Stable.
The classes are collateralized by mortgage loans recently transferred from Bank of America N.A. (BofA) to Nationstar. All of the classes held investment grade ratings prior to the rating actions and were on Rating Watch Negative due to interest shortfalls. The interest shortfalls were the result of loan performance and a recoupment of prior servicer advances on delinquent loans by Nationstar.
All but two of the classes have recovered all prior interest shortfalls as of the latest remittance date.
A spreadsheet detailing the actions can be found on Fitch's website by performing a title search for 'U.S. RMBS Rating Actions for July 16, 2014' or by clicking on the link.
KEY RATING DRIVERS
Whether the interest shortfalls were recovered generally determined the rating action on the affected classes. Classes that recovered the interest shortfalls were affirmed at their current rating with the exception of the four classes rated higher than 'Asf.' Even though these four classes recovered the interest shortfalls, the ratings were downgraded to 'Asf' in accordance with our rating cap criteria. The two classes that have not yet recovered the interest shortfalls were downgraded to 'BBsf,' to reflect a lower likelihood of recovery.
While Fitch views this as unlikely, these classes may incur additional interest shortfalls related to future servicer advancing recoupment. Under such a scenario a rating committee will review all affected classes to assess the likelihood of recovery.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'U.S. RMBS Surveillance Criteria' (June 24, 2014);
--'Global Structured Finance Rating Criteria' (May 20, 2014);
--'U.S. RMBS Loan Loss Model Criteria' (Dec. 23, 2013);
--'U.S. RMBS Cash Flow Analysis Criteria' (April 16, 2014);
--'Criteria for Interest Rate Stresses in Structured Finance Transactions' (Jan. 25, 2013);
--'Criteria for Rating Caps and Limitations in Global Structured Finance Transactions' (May 28, 2014);
--'Counterparty Criteria for Structured Finance and Covered Bonds' (May 14, 2014);
--'Structured Finance Recovery Estimates for Distressed Securities' (Nov. 18, 2011).
Applicable Criteria and Related Research: U.S. RMBS Rating Actions for July 16, 2014
U.S. RMBS Surveillance Criteria - Effective October 9, 2013 to June 24, 2014
Global Structured Finance Rating Criteria
U.S. RMBS Loan Loss Model Criteria
U.S. RMBS Cash Flow Analysis Criteria
Criteria for Interest Rate Stresses in Structured Finance Transactions
Criteria for Rating Caps and Limitations in Global Structured Finance Transactions
Counterparty Criteria for Structured Finance and Covered Bonds
Structured Finance Recovery Estimates for Distressed Securities