A new servicer rating issued for Provident Funding Associates LP reflects a successful loan modification strategy and a tenured management team but was tempered by elevated employee turnover and customer call abandonment rates.
An SQ3+ rating was assigned to the Burlingame, Calif.-based company’s service quality assessment as a primary servicer of prime residential loans. The strongest possible servicer quality rating is SQ1+, and the weakest rating is SQ5-.
Collection abilities, loss mitigation abilities and foreclosures and REO timeline management that were all above-average were behind the rating.
Provident adopted an early modification strategy that benefited early-stage delinquencies, according to Moody’s Investors Service, which issued the rating Wednesday. Modification solicitation packages are sent on the 32nd day of delinquency — improving conversion rates for trial modifications and reducing re-default rates on permanent modifications. No monthly incentives are used to drive performance.
An attorney network is managed through a proprietary vendor management system and evaluated through scorecards.
Most of Provident’s REOs are marketed by the investor.
Another factor impacting the initial servicer rating was below-average servicing stability.
Provident operates through a blended customer service and collections branch network that interacts with borrowers until loss mitigation solicitation. Moody’s warned that abandonment rates have been unusually high at Provident’s customer service call centers in the second-half 2012 as call volume and employee turnover has been high.
“Provident’s below average stability category is heavily influenced by its Ba3 long-term issuer rating as well as the private ownership of the company,” Moody’s added. “Outside of the tenured senior management which has an average of 24 years of industry experience, the tenure and experience of servicing management and employees compare unfavorably to peers, as employees largely do not have mortgage experience prior to Provident. Additionally, internal controls and oversight can be improved as the company does not have a separate quality control department in addition to internal audit as other servicers do.
“Positively, the company has a residential mortgage portfolio with a history of low delinquencies as well as clean RegAB results for the past three years.”
Provident reported to Mortgage Daily that it serviced 354,233 loans for $79.050 billion as of Sept. 30.
