Small Special Servicer Sees Upgrade

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A Texas-based special servicer with a small subprime servicing portfolio saw an improvement to its rating.

In September 2009, the Federal Deposit Insurance Corp. unloaded a $1.3 billion residential loan portfolio inherited from Houston-based Franklin Bank, SSB, which failed in November 2008.

The following year, the FDIC sold off nearly $1 billion in non-performing loans acquired from the failure of AmTrust Bank in December 2009.

On the other side of those transactions was Residential Credit Solutions Inc.

On Friday, Fitch Ratings said it upgraded the Fort Worth, Texas-based servicer’s rating for subprime product to RPS2- from RPS3+.

The New York-based ratings agency also lifted Residential’s special servicing to RSS2- from RSS3+.

Fitch credited the company’s “effective default capabilities and competitive performance metrics; focused, ‘high touch’ servicing approach; effective foreclosure practices, and improving internal control environment.”

The company’s servicing staff stands at 178 full-time employees.

Its mortgage servicing portfolio was 29,200 loans for $4.8 billion as of June 30. The portfolio includes 17,100 subprime first and second mortgages for $3 billion. Special servicing accounts for 70 percent of the total portfolio.

“Once loans are referred to loss mitigation, they are assigned to individual agents for the life of the default to maximize loan level knowledge, create accountability, and build rapport with the borrower in an effort to reach a resolution that avoids foreclosure,” Fitch stated. “RCS utilizes a loss mitigation application it developed with a financial analytics technology firm. The application incorporates automated underwriting technology, investor specific rules, and real time credit bureau updates.”

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Mortgage Daily Staff

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