NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed the U.S. residential primary servicer ratings for Carrington Mortgage Services, LLC (Carrington), and assigned a Stable Outlook as follows:
--U.S. residential primary servicer rating for subprime product at 'RPS3, Outlook Stable;
--Special servicer rating at 'RSS3', Outlook Stable.
The rating affirmation and Stable Outlook reflects Carrington's high touch servicing model; improved internal controls in keeping pace with the current regulatory environment; enhanced technology supporting key business initiatives; and stable employee base which continues to remain strong.
Although the servicer experienced a year over year increase in their customer service and collections metrics, these metrics remain well within Fitch's benchmarks for above industry averages. In addition, the ratings also take into consideration the financial condition of Carrington, a non-rated Fitch entity, as financial condition is a component of Fitch's servicer ratings.
In addition, the ratings reflect changes Fitch made to weights on various servicer metrics and categories used in its analytical process which were instituted for all forward mortgage servicers in 2011.
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 which are likely to be mandated by regulators and other parties.
Carrington operates its servicing platform from Santa Ana, CA and Fishers, IN with a total of 192 full-time equivalent (FTE) servicing employees at the time of Fitch's review. As of June 30, 2012, Carrington was servicing over 53,000 loans totaling $9.6 billion comprised mostly of first and second lien subprime loans. The portfolio included 49,778 primary servicing loans and 4,085 special serviced loans.
Fitch believes that Carrington continues to maintain a capable servicing operation with the staff, procedures, controls, default management processes, and technology to manage its current servicing portfolio. Fitch will continue to monitor the company's ability to maintain performance as it pursues its servicing initiatives in this high delinquency environment.
The U.S. Residential Mortgage Servicer ratings sector Outlook remains Negative. On Nov. 4, 2010, Fitch assigned a Negative Outlook for the entire U.S. Residential Mortgage Servicer ratings sector on increased concerns surrounding alleged procedural defects in the judicial foreclosure process.
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, 2011 which is available on the Fitch Ratings web site at 'www.fitchratings.com'.
Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Global Rating Criteria for Structured Finance Servicers' (Aug. 16, 2010);
--'U.S. Residential and Small Balance Commercial Mortgage Servicer Rating Criteria' (Jan. 31, 2011).
Applicable Criteria and Related Research:
Global Rating Criteria for Structured Finance Servicers
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547305
U.S. Residential and Small Balance Commercial Mortgage Servicer Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=600065
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