Fitch Downgrades EverBank's Servicer Rating; Outlook Stable

NEW YORK--()--Fitch Ratings has taken the following rating action for the U.S. residential mortgage servicer rating of EverBank FSA dba Everhome Mortgage (EverBank):

--Residential primary servicer rating for Prime product downgraded to 'RPS3' from 'RPS3+'; removed from Negative Watch; assigned Stable Outlook.

The rating action is based on the changes that EverBank made to its servicing operations in association with the June 30, 2014, sale and transfer of its default servicing platform to Green Tree, LLC. Fitch noted that the arrangement has significantly reduced the servicer's overall delinquency to 5.86% from 11.53% and represents a material reduction in portfolio size to approximately 270,000 loans from 417,000. Additionally, the purchaser acquired office space and approximately 500 full-time equivalents (FTEs) from the servicer's Jacksonville location. EverBank indicated that it would retain default management capabilities by merging the remainder of the default operations into the asset management group, and expand its single point of contact (SPOC) relationship.

The servicer has continued to strengthen its risk management oversight and corporate governance procedures. The parent hired an experienced auditor in September 2013, to assume senior management oversight over the enterprise-wide internal audit functions. The parent increased the number of FTE positions in risk management to 60 from 33 with eight dedicated to servicing. EverBank completed its first Reg AB report for the period ended Dec. 31, 2013 with no material non-compliance issues. However, the servicer is still under consent order with the Office of the Comptroller of the Currency (OCC), with regard to its Aug. 23, 2013 foreclosure settlement.

While Fitch believes that the realignment within the default management department and the sale and transfer of the nonperforming loans will materially improve the servicer's delinquency performance, the new structure and staffing levels are ongoing, and this may further impact its servicing performance and abilities. For this review period, the servicer experienced elevated levels for its customer service average hold time and abandonment rate and has indicated that a new monitoring process will be implemented to better manage this process. However, Fitch believes the servicer will continue experiencing deficiencies in certain areas of its operation until it finalizes its platform changes.

EverBank is headquartered in Jacksonville FL and has been servicing residential mortgage loans for over 53 years through its many predecessor name changes and acquired companies. Prior to rebranding as EverBank in 2004, the company had acquired or joint-ventured to form various mortgage and/or banking operations. In 2007, EverBank acquired mortgage servicing assets from NetBank, and in 2010, acquired the banking operations of Bank of Florida. As of July 31, 2014, EverBank was servicing 273,927 residential mortgage loans totaling $44.6 billion. This included approximately 10,300 non-agency RMBS prime loans totaling $2.3 billion.

Fitch will continue to monitor EverBank's platform as the company refocuses on servicing performing loan products, further integrates its staff, and enhances its risk management process.

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

Applicable Criteria and Related Research:

--'Rating Criteria for Structured Finance Servicers', Feb. 26, 2013

--'Rating U.S. Residential and Small Balance Commercial Mortgage Servicer Rating Criteria' (Jan. 31, 2011).

Applicable Criteria and Related Research:

U.S. Residential and Small Balance Commercial Mortgage Servicer Rating Criteria -- Effective January 31, 2011 to January 30, 2014

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=600065

Global Rating Criteria for Structured Finance CDOs

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=751136

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=870174

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Contacts

Fitch Ratings
Primary Analyst
Michael Laidlaw
Director
+1-212-908-0251
Fitch Ratings, Inc.
33 Whitehall St.
New York, NY 10004
or
Secondary Analyst
Roelof Slump
Managing Director
+1-212-908-0705
or
Committee Chairperson
Vanessa Purwin
Senior Director
+1-212-908-0269
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
Email: sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Michael Laidlaw
Director
+1-212-908-0251
Fitch Ratings, Inc.
33 Whitehall St.
New York, NY 10004
or
Secondary Analyst
Roelof Slump
Managing Director
+1-212-908-0705
or
Committee Chairperson
Vanessa Purwin
Senior Director
+1-212-908-0269
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
Email: sandro.scenga@fitchratings.com