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BoA Servicer Ratings Downgraded

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Challenges from its acquisition of Countrywide Financial Corp. three years ago have home-loan servicing metrics deteriorating at Bank of America Corp. — resulting in downgrades on its prime and nonprime servicer ratings. Ongoing concerns about the company’s foreclosure process could lead the ratings to be lowered again.

The action came Tuesday from Moody’s Investors Service.

According to the New York-based ratings agency, the primary servicer rating for prime residential loans was cut to SQ2 from SQ1. The best possible rating is SQ1+, while Moody’s lowest rating is SQ5-.

In addition, the primary servicer ratings for second-liens and subprime loans, as well as the residential special servicer rating, were all lowered to SQ2 from SQ1-.

The downgrades impacted BAC Home Loans Servicing, LP and Bank of America, N.A. — the two entities that conduct servicing for the organization.

“The downgrade was mainly due to the deterioration of the company’s collections and loss mitigation metrics,” Moody’s explained. “The company’s assessment for servicing stability also was lowered to above average from strong which reflects the challenges Bank of America continues to face with the integration of Countrywide Home Loans.”

BofA acquired Countrywide in July 2008.

Moody’s said that between the two servicing entities, the mortgage servicing portfolio was 13,308,802 loans for $2.05 trillion as of Sept. 30, 2010.

More recently, BofA reported a third-party servicing portfolio of $2.03 trillion as of March 31.

Moody’s said that all of the downgraded ratings, except the second lien rating, are still on review for further downgrades “due to irregularities in Bank of America’s foreclosure process.”

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