Mortgage Daily

Published On: October 20, 2009

Despite an uncertain future at Residential Capital LLC, one of its servicer ratings was upgraded.

The company’s residential master servicer rating was raised by Fitch Ratings to RMS3 from RMS4, a news release yesterday indicated. The action followed an upgrade to ResCap’s primary servicer rating to RPS3 from RPS4 in June by Fitch.

Ratings range from RMS5- to RMS1+ , with RMS1+ being the best possible rating.

Fitch cited ResCap’s evolving financial condition as parent GMAC LLC has continued to pump capital into the subsidiary while it receives substantial government support.

“The rating action also reflects the company’s experienced and tenured management team, solid training programs, extensive master servicing experience, as well as the company’s proficient use of technology to effectively oversee and monitor the activities of its primary servicers,” the statement said. “Fitch has completed its operational review of ResCap’s master servicing platform and believes the company continues to demonstrate its ability to manage its master servicing operation with experienced management and staff, appropriate controls, and proficient and focused technology.”

Fitch noted operational and technological improvements to the Burbank, Calif., unit’s servicing platform that have been made since’s its last review. Also cited were improved training and primary servicer monitoring as well as enhanced tracking and reporting capabilities on modified loans.

ResCap’s master servicing portfolio was 584,000 loans for more than $94.5 billion as of June 30. Subprime loans accounted for 42 percent of the portfolio, while one-quarter was Alt-A and 12 percent were closed-end second liens.

Still, GMAC has yet to commit to ongoing support for ResCap and has discussed sending the subsidiary into bankruptcy. A new correspondent unit launched last month was under the Ally Bank brand, while no mention was made of ResCap in a recent statement about a new president recently hired to oversee GMAC Mortgage Operations.

Second-quarter mortgage banking earnings were a $2 billion loss.

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