NEW YORK--(BUSINESS WIRE)--Fitch Ratings has taken the following actions on the U.S. residential primary servicer ratings for Specialized Loan Servicing, LLC (SLS):
--Special servicer rating upgraded to 'RSS2+' from 'RSS2', Outlook revised to Stable from Positive;
--Primary servicer rating for Subprime product upgraded to 'RPS2+' from 'RPS2', Outlook revised to Stable from Positive;
--Primary servicer rating for Prime product affirmed at 'RPS2, Outlook revised to Stable from Positive;
--Primary servicer rating for Alt-A product affirmed at 'RPS2', Outlook revised to Stable from Positive;
--Primary servicer rating for HELOC product affirmed at 'RPS2', Outlook revised to Stable from Positive;
--Primary servicer rating for Second Lien product affirmed at 'RPS2', Outlook revised to Stable from Positive.
KEY RATING DRIVERS
The upgrades to 'RPS2+/RSS2+' for the subprime and special servicer ratings, respectively, is reflective of SLS's servicing platform that is focused on the nuances of servicing distressed loans. The affirmation of the 'RPS2' ratings for Prime, Alt-A, HELOC and Second Lien products reflects the overall strength, continued developments and new functionalities for servicing its performing borrower base. All ratings take into account the servicer's robust control environment, integrated technology and effectively managed growth.
The revision of the Outlook to Stable takes into account the integration of SLS into the overall Computershare Limited (Computershare) organization and the company's ongoing investments in the servicer.
SLS's executive management exhibits significant tenure within the mortgage industry, especially in the servicing of distressed assets. The company has established a well performing servicing platform catering to the nuances of such loans. Fitch found that SLS uses an effective mix of servicing strategies in their handling of challenged loans, and their experienced staff contributes meaningfully to the success of these efforts.
SLS has a good risk management and framework utilizing the three lines of defense model. This includes quality assurance as the first line, quality control as the second line, and internal audit as the third line. The servicer's risk management framework has demonstrated continued improvements reflecting the highly regulated nature of its parent. Fitch believes that SLS's focus on continued risk management enhancements is a positive.
The ratings also take into consideration the financial condition of SLS and its parent; both are non-rated entities. Financial condition is a component of Fitch's servicer ratings.
SLS is headquartered in Highlands Ranch, CO. As of Sept. 30, 2016, SLS' portfolio comprised approximately 350,000 loans totaling $49 billion. The portfolio contains approximately 81,000 subprime loans totaling $16.5 billion, 66,000 agency loans totaling $14.5 billion, 53,000 HELOC loans totaling $2.7 billion, 50,000 subprime closed-end second liens totaling $1.7 billion, 39,000 Alt-A loans totaling $10 billion, and 62,000 other loans totaling $3.5 billion.
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 Criteria for U.S. Residential and Small Balance Commercial Mortgage Servicers', dated April 23, 2015, which is available on the Fitch web site at 'www.fitchratings.com'.
Additional information is available at www.fitchratings.com.
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