Mortgage Daily

Published On: June 5, 2009
First Tennessee Servicing Ops DeteriorateMoody’s downgrades 2nd lien servicer rating

June 5, 2009

By MortgageDaily.com staff

Deterioration in the servicing platform at First Tennessee Bank National Association, which is just a shell of its former self, prompted a downgrade to the company’s servicer rating for junior liens.Moody’s Investors Service announced the downgrade yesterday.

First Tennessee’s servicer quality ratings for second liens was lowered to SQ2- from SQ2, Moody’s said. The best possible rating is SQ1+, while the lowest is SQ5-.

First Tennessee parent First Horizon National Corp. sold most of its mortgage operations outside Tennessee to MetLife Bank, N.A., in September 2008. The new unit operates as MetLife Home Loans. That deal included the sale of a first-lien servicing portfolio in the amount of $19 billion.

Moody’s noted that First Tennessee has shifted its strategy from expansion to regional dominance. Mortgage activity will be limited to its regional banking markets.

Servicing operations are located in the Tennessee towns of Knoxville and Memphis.

The ratings agency said the company’s customer-service call center experienced an average abandonment rate of around 10 percent last year.

“Moody’s believes that the continued deterioration in the mortgage market along with the slowdown in origination volume has the potential to moderately impact the investment and resource levels in First Tennessee’s servicing platform,” the statement said.

As of April 30, First Tennessee serviced 120,847 home-equity lines-of-credit and 80,140 closed-end second liens. The servicing portfolio totaled $10.5 billion.


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