Just a few days behind Standard & Poor’s and Moody’s Investors Service, Fitch Ratings has become the latest to downgrade Fairbanks Capital Corp.'s residential subprime primary servicer rating to 'RPS2-' from 'RPS1' as well as its Alt-A and Home Equity (closed-end seconds and HELOCs) primary servicer ratings to 'RPS2-' from 'RPS1-'.

Fitch also downgraded the corporation’s special servicer rating to 'RSS2-' from 'RSS1'. All of Fairbanks’ servicer ratings remain on watch for further downgrade.

Fitch said that the rating actions were tied to recent events that have "created a significant amount of uncertainty regarding Fairbanks' financial viability, management stability and operational strength."

The rating agency is specially concerned about the limitations on the company's financial flexibility, particularly its ability to continue accessing lines of credit, and the company’s ability to fund its servicing operations. Aside from this, Fitch is also concerned about the continued loyalty of senior management, considering that there were recent executive management changes.

Fitch has scheduled an on-site servicer review for next week, which would include visits to the company's four servicing facilities. These are located in Utah, Texas, Florida and Pennsylvania. These reviews will be used to better assess Fairbanks' servicing practices, look into its financial flexibility, evaluate the impact of the new management team and address the allegations and lawsuits filed against the company.

Last week, Fairbanks announced that it was restructuring its executive management team. It also disclosed the addition of new servicing initiatives to address many of the issues facing the company. Fitch said that it views the direct management involvement of PMI Group, Inc. and Financial Security Assurance (FSA) as something positive for Fairbanks.

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