Fitch Affirms RoundPoint Mortgage Servicing Corp's Residential Mortgage Servicer Ratings

NEW YORK--()--Fitch Ratings has affirmed the following U.S. residential mortgage servicer ratings for RoundPoint Mortgage Servicing Corporation (RPMS):

--U.S. residential primary servicer rating for subprime product at 'RPS3+'

--U.S. residential special servicer rating at 'RSS3+'.

The Rating Outlooks have been revised to Negative from Stable.

The rating affirmations are based on RPMS's continued investment in its compliance management system, experienced management team and staff, increased automation, and enhanced servicing system and processes. The ratings also take into consideration the servicer's effective staffing, recruiting and retention program, and its 'White Glove' customer service that focuses on improving customer service disciplines throughout the organization.

As of March 31, 2015, RPMS was servicing 249,162 loans totaling $46.9 billion. This was comprised of 226,618 agency loans totaling $44 billion and 3,400 non-agency RMBS loans for $610 Million and 19,144 loans serviced for others totaling $2.1 billion.

Fitch has placed the servicer ratings on Outlook Negative based on the corporate restructuring. Additionally, given elevated earnings pressure associated with corporate changes, Fitch believes the servicer's dependency upon parent company support is now heightened in order to maintain expected balance sheet growth and meet earnings targets.

Additionally, since October 2014, RPMS began operating as a stand-alone business entity. Shared corporate functionalities and expenses between the parent company, RoundPoint Financial Group (RPFG) and RPMS, were terminated. In addition, two of RPFG's executive officers transitioned to the servicing operations.

In October 2014, RPMS's sister company, RoundPoint Mortgage Company (RPMC), terminated its operation as an originator of residential mortgage loans. RPMC previously provided refinancing programs and acted as a conduit for flow servicing for RPMS. Fitch does not believe that RPMC's exit will have a material impact on RPMS's servicing operation.

The ratings also take into consideration RPMS's enterprise risk management practices. The servicer was fully compliant with its 2014 Regulation AB reporting and stated that it has no outstanding regulatory issues concerning its servicing platform. In addition, the ratings reflect RPMS's enhanced default management capabilities, effective staff performance incentive and management oversight programs. The ratings also reflect the financial condition of RPMS, a non-publicly rated entity, as financial condition is a component of Fitch's servicer ratings.

RPMS's servicing operations are headquartered in Charlotte, NC, with an additional site in Dallas, TX. Since the prior review, the servicer has implemented a new telephony system and made several enhancements to its website to facilitate ease of use by its mortgagors. In April 2015, the servicer implemented a staff augmentation model, building an offshore call center of 50 representatives in Manila, Philippines. These representatives are dedicated to the payment and general inquiry queues. The servicer indicated that it utilizes the SharePoint environment, where its complaint management system is housed, allowing for improved tools and functionality for effective control over the call center operation. The servicer indicated that it does not offshore any customer facing default management functions.

RPMS is a wholly owned subsidiary of RoundPoint Financial Group, Inc., which is a part of the Tavistock Group, an international private investment organization founded more than 37 years ago. The servicer, which began operations in 2007 primarily as a special servicer, retains the mortgage servicing rights of new loans primarily through bifurcated agency transactions. The servicer is an approved servicer of FNMA, FHLMC, GNMA, FDIC, FHA, and VA loans.

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

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

Applicable Criteria

Rating Criteria for Structured Finance Servicers (pub. 23 Apr 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864375

Rating Criteria for U.S. Residential and Small Balance Commercial Mortgage Servicers (pub. 23 Apr 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864368

Additional Disclosures

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=988139

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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Contacts

Fitch Ratings
Primary Analyst
Michael Laidlaw
Director
+1-212-908-0251
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Thomas Crowe
Senior Director
+1-212-908-0227
or
Committee Chairperson
Suzanne Mistretta
Senior Director
+1-212-908-0639
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 Street
New York, NY 10004
or
Secondary Analyst
Thomas Crowe
Senior Director
+1-212-908-0227
or
Committee Chairperson
Suzanne Mistretta
Senior Director
+1-212-908-0639
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
Email: sandro.scenga@fitchratings.com