|Concerns over Bank of America, N.A.'s, financial condition led to servicer ratings downgrades at the banking behemoth and its mortgage subsidiary. The actions impacted servicer ratings for prime mortgages, Alternative-A loans and home-equity lines-of-credit.
The Charlotte, N.C.-based company's primary servicer ratings for prime, Alt-A and HELOC product was downgraded to RPS1- from RPS1 by Fitch Ratings, an announcement yesterday said.
Servicers are rated on a scale of one to five, with one being the strongest. Ratings are further differentiated by plus or minus signs.
Fitch cited a downgrade to BoA's issuer-default rating in light of its deteriorated financial condition.
"The servicer rating actions reflect the potential impact on servicing operations of continued pressure on Bank of America, N.A.'s, financial flexibility in the increasingly challenged residential mortgage market," the ratings agency stated. "A company's financial condition is an important component of Fitch's servicer rating analysis."
During 2008, BoA's earnings fell to $4 billion from $15.0 billion during 2007. Its Dec. 31 acquisition of Merrill Lynch & Co. Inc. -- which had a fourth-quarter net loss of $15.3 billion and a $27.1 billion full-year loss -- is likely to further strain earnings.
BoA's condition also led to several residential servicer rating downgrades at subsidiary Countrywide Home Loans.
The Calabasas, Calif.-based company saw its primary servicer ratings for Alt-A, subprime and HELOC loans downgraded to RPS2+ from RPS1. Countrywide's prime mortgage servicer rating was downgraded to RPS1- from RPS1, while its special-servicer rating was downgraded to RSS2+ from RSS1-.