Fitch Affirms Bank of America's U.S. RMBS Servicer Ratings; Outlook Revised
NEW YORK -- March 28, 2014
Fitch Ratings has affirmed the following residential mortgage servicer ratings
on Bank of America, N.A. (BANA) U.S., and revised their Rating Outlooks to
Stable from Negative:
--Primary servicer rating for Prime product at 'RPS2-' Outlook Stable;
--Primary servicer rating for Alt-A product at 'RPS2-', Outlook Stable;
--Primary servicer rating for HELOC product at 'RPS2-', Outlook Stable;
--Primary servicer rating for Subprime product at 'RPS2-', Outlook Stable;
--Primary servicer rating for Second Lien product at 'RPS2-, Outlook Stable;
--Special servicer rating at 'RSS2-', Outlook Stable.
The rating actions reflect significant improvement in BANA's internal audit
results, and reduction in Regulation AB (Reg AB) instances of material
non-compliance and Uniform Mortgage Bankers Single Attestation Program for
Mortgage Bankers (USAP) findings from the prior review. The rating actions
also reflect BANA's continued investment in technology and enhancements to its
internal control environment. In addition, the ratings incorporate the
company's financial condition. BANA is rated 'A' with a Negative Outlook by
Fitch. A company's financial condition is a component of Fitch's servicer
Finally, the ratings also 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.
Since Fitch's prior review, BANA has made substantial progress in reducing its
defaulted loan portfolio through mortgage servicing rights (MSR) sales,
allowing the company to focus on re-aligning its mortgage servicing operations
while consolidating sites.
As of Dec. 31, 2013, BANA's mortgage servicing portfolio was composed of
6,204,596 loans totaling $817.2 billion, a decrease from 9,568,687 loans
totaling $1.3 trillion as of the prior year end. The total servicing portfolio
included 11.5% non-agency first lien prime product, 1% first lien Alt-A
product, 2.3% first lien subprime product, 23.8% HELOC product, and 5.7%
closed-end second lien product based on loan count. BANA's special servicing
portfolio consisted of 6,750 loans totaling $330.7 million.
BANA continues to invest in technology and operational initiatives. During the
current review period, the company focused on support for compliance with CFPB
and NMS servicing standards, and implemented over 170 CFPB related changes.
BANA stated that overall it is substantially compliant with all CFPB
requirements. The company also expanded its quality control (QC) resources and
the scope of testing. QC reviews cover high-risk processes and key controls,
and include testing related to GSEs, investors, insurers, treasury and
settlements as well as sub-servicers.
Fitch will continue to monitor BANA's ability to maintain performance as it
pursues its servicing initiatives in this high delinquency environment.
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:
--'Global Rating Criteria for Structured Finance Servicers' (Aug. 13, 2010);
--'U.S. Residential and Small Balance Commercial Mortgage Servicer Rating'
(Jan. 31, 2011).
Applicable Criteria and Related Research:
Rating Criteria for Structured Finance Servicers
U.S. Residential and Small Balance Commercial Mortgage Servicer Rating
Criteria -- Effective January 31, 2011 to January 30, 2014
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Thomas Crowe, +1-212-908-0227
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
Roelof Slump, +1-212-908-0705
Vanessa Purwin, +1-212-908-0269
Sandro Scenga, +1-212-908-0278 (New York)
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