Fitch Affirms Ocwen's Small Balance Commercial Servicer Ratings

NEW YORK--()--Fitch Ratings has affirmed Ocwen Loan Servicing, LLC's (Ocwen) small balance commercial (SBC) servicer ratings as follows:

--Small balance primary servicer rating at 'SBPS2-'; Outlook Stable;

--Small balance special servicer rating at 'SBSS2-'; Outlook Stable.

The rating affirmations and Stable Outlook reflect the SBC servicing operation's strong management and staff experience, highly integrated technology environment, robust investor and borrower websites, and improved governance and operational controls. In addition, the ratings incorporate the company's financial condition. In June 2016, Fitch affirmed the Long-Term Issuer Default Ratings (IDRs) for Ocwen Financial Corporation and its wholly-owned primary operating subsidiary, Ocwen at 'B-' with a Stable Rating Outlook.

Ocwen's SBC servicing operation is located in Houston, TX and West Palm Beach, FL. Ocwen's SBC servicing shares senior management with the company's large balance commercial mortgage servicing operation, and leverages both the residential and large balance servicing operations, technology, and global and domestic servicing sites. Fitch also rates Ocwen as a residential mortgage servicer; in February 2016, Fitch upgraded its primary servicer ratings to 'RPS3-' and its special servicer rating to 'RSS3-', and revised the Outlooks to Stable. The residential servicer rating upgrades reflect improvements in the company's corporate governance and operational control framework and refocus on private label securitization servicing.

Since Fitch's prior review, a specialized customer care center (CCC) team that handles outbound dialer campaigns for performing and non-performing SBC loans was relocated from Houston to Coppell, TX and Waterloo, IA. The specialized CCC team, which also handles inbound calls to accept payments, and respond to escrow and account related questions, is embedded in Ocwen's residential servicing operation. Escalated account inquiries or special requests are referred to assigned SBC servicing portfolio managers. Ocwen's SBC servicing's default management department handles all borrower workout requests and default management functions.

Ocwen's large balance commercial servicing operation provides support for SBC loans with special servicing, valuations, and default services teams located in West Palm Beach, FL; and with back office operations located in India. The India staff reconciles the annual business operating statements, orders property valuations, collects and analyzes financial information on real estate owned (REO) properties, and processes work orders for REO property management.

The SBC servicing operation benefits from changes that Ocwen continues to make to its corporate governance and operational control framework. These changes include enhancements to its three lines of defense approach to risk management which incorporate risk management responsibility at the business unit level first; within risk management, compliance, and legal groups second; and within internal audit third. Ocwen continues to add staff to its support risk management, regulatory compliance, and internal audit functions.

As of March 31, 2016, Ocwen's SBC servicing portfolio was comprised of 4,228 loans totaling $1.7 billion. This includes primary servicing 2,514 loans totaling $900 million, special servicing 609 loans totaling $249.9 million, and third party servicing 1,105 loans totaling $520.9 million. The collateral for the SBC portfolio consists of approximately 18% retail, 17% industrial, 21% multifamily, 16% mixed-use, 12% office, 3% self-storage, 8% land, and 5% other based on unpaid principal balance.

Additional information is available on www.fitchratings.com

Applicable Criteria

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=1007811

Endorsement Policy

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

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Contacts

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

Contacts

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