Fitch Downgrades IndyMac Mortgage Services' U.S. RMBS Servicer Ratings;
Maintains Negative Watch
NEW YORK -- August 19, 2013
Fitch Ratings has downgraded the U.S. residential servicer ratings for IndyMac
Mortgage Services, a division of OneWest Bank, FSB (IndyMac) as follows:
--U.S. Residential primary servicer rating for prime product to 'RPS3' from
--U.S. Residential primary servicer rating for Alt-A product to 'RPS3' from
--U.S. Residential primary servicer rating for subprime product to 'RPS3' from
--Special servicer rating to 'RSS3'from 'RSS3+;
The ratings remain on Negative Watch.
The servicer rating downgrades and Rating Watch Negative reflect the
significant strategy change for IndyMac's servicing operations following the
announcement in June 2013 that Ocwen Loan Servicing, LLC (Ocwen) intends to
purchase the mortgage servicing rights (MSRs) to IndyMac's agency and
non-agency RMBS portfolio of approximately $78 billion. Ocwen is not expected
to acquire any of IndyMac's servicing staff or operations in connection with
the MSR purchase. Loan transfers are expected to occur in multiple stages and
to be completed by the end of the fourth quarter 2013. Fitch notes the
departure of IndyMac's head of servicing, and is concerned that the company's
servicing operations could deteriorate while the transfers are taking place.
The servicer ratings also reflect instances of material non-compliance in the
company's Reg AB report for the year ended Dec. 31, 2012 and the financial
condition of IndyMac, a division of OneWest Bank, FSB, both non-rated
entities, as financial condition is a component of Fitch's servicer ratings.
Additionally, the servicer ratings take into consideration the Consent Order
that IndyMac's parent, OneWest Bank, is entered into with the Office of Thrift
Supervision (now the Office of the Comptroller of the Currency, or OCC) in
April 2011, and the company's continuing obligation to comply with all
requirements thereof. On a positive note, the servicer ratings incorporate
operational improvements including IndyMac's implementation of processes to
address concerns raised in the Consent Order. The company enhanced its
foreclosure oversight, established a single point of contact for defaulted
borrowers, and developed a comprehensive vendor management program.
Finally, the ratings reflect Fitch's overall concerns for the U.S. residential
servicing industry which include the ability to maintain high performance
standards while addressing the rising cost of servicing and changes to
industry practices, mandated by regulators and other parties.
As of June 30, 2013 IndyMac's servicing portfolio consisted of 378,375 loans
with an unpaid principal balance (UPB) of approximately $88 billion. The
portfolio, based on UPB, is comprised of approximately 27% Alt-A product, 22%
prime product, and 10% subprime product; 37% government sponsored enterprise
products; and 4% second lien product.
OneWest Bank is a wholly owned subsidiary of OneWest Bank Group, LLC
(OneWest), which was founded in March 2009 by a consortium of investors
including Paulson & Co and J.C. Flowers & Co. The IndyMac platform has
serviced residential loans for 19 years. IndyMac maintains three servicing
sites in Pasadena, CA, Austin, TX, and Kalamazoo, MI.
Fitch rates residential mortgage primary, master, and special servicers on a
scale of 1 to 5, with 1 being the highest rating. Within some of these rating
levels, Fitch further differentiates ratings by plus (+) and minus (-) as well
as the flat rating. For more information on Fitch's residential servicer
rating program, please see Fitch's report 'Rating U.S. Residential and Small
Balance Commercial Mortgage Servicer Rating Criteria', dated Jan. 31, 2011
which is available on the Fitch Ratings web site at 'www.fitchratings.com'.
Additional information is available at 'www.fitchratings.com'
Applicable Criteria and Related Research:
--'Rating Criteria for Structured Finance Servicers' (Feb.6, 2013);
--'U.S. Residential and Small Balance Commercial Mortgage Servicer Rating
Criteria' (Jan. 31, 2011).
Applicable Criteria and Related Research:
Rating Criteria for Structured Finance Servicers
U.S. Residential and Small Balance Commercial Mortgage Servicer Rating
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS.
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL,
COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM
THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER
PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS
OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN
EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER
ON THE FITCH WEBSITE.
Natasha Hanson, +1 212-908-0272
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
Diane Pendley, +1 212-908-0777
Grant Bailey, +1 212-908-0544
Sandro Scenga, +1 212-908-0278
Press spacebar to pause and continue. Press esc to stop.