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| Despite improvements to servicing platform, National City Bank’s second-mortgage servicer rating was downgraded.Moody’s Investors Service lowered the Cleveland-based bank’s servicer quality rating for second lien loans to SQ2- from SQ2, an announcement today said. Nearly a year ago, Moody’s had downgraded the rating from SQ2+. Servicing of closed-end loans and home-equity lines-of-credit are impacted.
Ratings are based on a scale of one to five, with one being the strongest. Plus and minus signs further differentiate the rating. While Moody’s noted that National City’s servicing stability it above average and its collections abilities and loss-mitigation results are average, the tools used to determine optimal workout options is less sophisticated than that used by its peers. In addition, its loss mitigation team is less experienced than that of the competition. Moody’s said it viewed National City’s acquisition by PNC Bank on Dec. 31 as an enhancement to stability — though the level of ongoing commitment to the operation is still unknown. The ratings agency also criticized the bank for not using a net present value model in its determination of workout options. Still, Moody’s praised a 38 percent increase in employees at National City’s collections department — which it said will help the servicer to more effectively manage rising delinquency. National City serviced 484,500 HELOCs and 183,246 closed-end seconds as of Jan. 31, the report said. The balance of the home-equity portfolio was $33.5 billion. |
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