Loan Accounting, Investor Reporting, & Default Management

Fitch Ratings upgraded Aurora Loan Services’ residential primary servicer rating for Alt-A product from “RPS2” to “RPS2+” and affirmed its master servicer rating of “RMS2+”. The primary servicer rating was based on the Aurora’s continued effective loan administration processes in servicing Alt-A loan products, as well as the financial strength of its parent, Lehman Brothers Holdings Inc., and its experienced management team, Fitch said. The master servicer rating was based on the company’s continued validated servicing practices and procedures in the functions of investor accounting and remitting processes, primary servicer oversight, default monitoring, and contract administration.

As of Sept. 30, Aurora’s primary servicing portfolio consisted of over 220,000 loans with an unpaid principal balance of more than $23.7 billion, of which over 35% represented Alt-A product in dollar volume, Fitch said. Also as of Sept. 30, Aurora’s master servicing portfolio consisted of 270,000 loans with an unpaid balance of $38.2 billion, of which $31.7 billion represented private residential mortgage backed securitizations.

Fitch affirmed the “RPS3” residential primary servicer ratings for prime and Alt-A products of Provident Funding Associates, L.P. The ratings were based on the continued solid performance of Provident’s portfolio and the company’s experienced management team, Fitch said. The ratings also were attributed to the infrastructure developed by Provident, which effectively services the company’s portfolio.

Provident’s servicing portfolio has grown from nearly 20,000 loans for $2.7 billion at Dec. 31, 2000, to over 103,000 loans for over $17.5 billion as of Sept.30. Over 98% of the current servicing portfolio consists of agency loans, and approximately 1% is part of private residential mortgage backed securitizations.

Fitch affirmed Wells Fargo Bank Minnesota, N.A.’s “RMS1” residential master servicer rating. The rating was based on Wells Fargo’s extensive master servicing experience, strong financial condition, experienced management team, and advanced proprietary technology, Fitch said. The rating reflects the company’s demonstrated ability to effectively oversee and monitor the loan accounting, investor reporting, and default management activities of its primary and special servicers.

Wells Fargo is a leading master servicer of mortgage-backed securities (MBS) based on number of loans, Fitch said. As of Aug. 31, the bank performed full or partial master servicing functions for more than 603,713 loans, totaling about $75.5 billions.

Fitch affirmed all ratings of Bank of America Corporation and its affiliates. This action follows the announcement that the bank will acquire a 24.9% stake in Grupo Financiero Santander Serfin, an affiliate of Banco Santander Central Hispano. The investment in Grupo Financiero allows Bank of America to gain expertise and experience in serving Hispanic households within its U.S. footprint, Fitch said. The investment carries a $1.6 billion price tag, and will be financed in cash from liquid assets at the parent Bank of America Corporation. The acquisition is expected to be accretive to earnings.

Fitch upgraded First Horizon Home Loan Corporation’s residential primary servicer rating for prime mortgage loans to “RPS2” from “RPS3+”. The rating was based on First Horizon’s historical performance in servicing prime loans, experienced management team, solid collateral performance, effective loan administration procedures, and integrated technology, Fitch said. The rating also reflects the financial strength of First Horizon’s immediate parent, First Tennessee Bank National Association, as well as the stability and longstanding reputation of its ultimate parent, First Tennessee National Corporation, both of which are rated “A” by Fitch for long-term debt, the ratings servicer reported.

As of Aug. 31, First Horizon’s servicing portfolio consisted of 422,649 loans with an unpaid principal balance of $50.9 billion, Fitch said About 80% of the servicing portfolio is comprised of Fannie Mae, Freddie Mac, and Ginnie Mae product.

Fitch affirmed Fairbanks Capital Corporation’s “RPS1-” residential primary servicer rating for Alt-A product. The rating was based on Fairbanks ability to service, collect, and liquidate Alt-A product, and on Fairbanks’ experienced management team, strong loan administration procedures, advanced servicing technology, and solid financial condition, Fitch said.

In September, Fairbanks purchased the Austin-based Olympus Servicing LP platform and plans to retain the site to service its Alt-A product, as well as develop a centralized boarding facility. As of Sept. 30, Fairbanks serviced more than 546,000 loans totaling more than $46 billion of which 62,000 loans totaling over $10 billion were Alt-A product, Fitch said. The integration of the Olympus platform provides Fairbanks entry into the competitive Alt-A market with a stable, proven platform.

Fitch rates commercial mortgage primary, master, and special servicers on a scale of 1 to 4, with 1 being the highest rating. Residential ratings are on a scale of 1 to 5, with 1 being the highest rating. Within each of these rating levels, Fitch further differentiates ratings by a plus (+) and minus (-), the ratings servicer said.