Fitch Ratings today lowered Saxon Mortgage Services' residential servicer ratings.
The rating agency downgraded the firm's residential primary servicer rating for subprime collateral to 'RPS3' from 'RPS2+' and residential special servicer rating to 'RSS3' from 'RSS2+'.
Additionally, Fitch has also placed the servicer ratings on Watch Negative.
The rating downgrades and Rating Watch Negative are a result of the April 2 sale of MSRs and subservicing rights for certain non-agency RMBS deals that were previously serviced by Saxon.
The company expects all remaining servicing assets will be transferred to a new servicer or servicers within the next few months. It will also be closing the platform at that time.
Today's rating actions show the rising burden of managing delinquent and defaulted loans in the current regulatory environment. This falls under the areas of risk identified by the different regulatory bodies that ultimately resulted in consent orders with a number of large servicers.
Fitch noted that Saxon's indirect parent Morgan Stanley entered into a consent order with the Board of Governors of the Federal Reserve System on April 2 about allegations of foreclosure processing deficiencies.
