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Upgrade to Select’s Servicer Ratings

A host of factors contributed to an improvement in Select Portfolio Servicing Inc.’s servicer ratings for subprime mortgages and second liens. The company saw its average loan size jump by more than a quarter over the past year.

Moody’s Investors Services reported today that it upgraded Select’s primary servicer and special servicer quality ratings for subprime mortgages to SQ2+ from SQ2.

In addition, Select’s primary servicer rating for second liens was raised to SQ2 from SQ2-.

Moody’s rates the best servicers at SQ1+, while the worst servicers are rated SQ5-.

An improvement in Select’s collections and loss mitigation loan level performance compared to its peers was the primary driver behind the ratings action.

“In particular, the performance metrics benefited from modification, short sale, and other workout options that Select Portfolio Servicing offers to its borrowers at all stages of delinquency,” Moody’s stated. “Since the prior review, Select Portfolio Servicing trained its collectors and loss mitigators to evaluate every delinquent and imminent default loan for HAMP, and ensures that each loan has been solicited for HAMP before it moves to foreclosure referral.”

Since Moody’s last rated the Credit Suisse Inc.’s subsidiary on Aug. 21, 2009, it has increased staff at its India outsource vendor by 50 percent. This allowed the Select to expand non-customer facing functions offshore.

Moody’s also cited a conversion to voice-over-IP and the implementation of a Web-based REO system.

Select’s servicing portfolio was 210,093 loans for $35.5 billion as of June 30. A year earlier, the portfolio stood at 222,320 loans for $29.7 billion. The shift in the portfolio has increased the average loan size to around $169,000 from around $133,600 a year earlier.

The Salt Lake City-based company employed 781 people as of June 30.

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