Fitch Ratings will now conduct reviews of residential mortgage-backed securities deal agents as part of its RMBS master criteria, with Clayton Holdings as the first deal agent to receive an assessment.
Fitch said Monday that deal agent responsibilities may range from servicer and vendor oversight to credit risk management to investor reporting and reconciliation. The ratings agency may also include enforcement of transaction governing agreement and resolution of representation and warranty breaches among agent responsibilities.
When reviewed, deal agents will be assessed as "acceptable" or "unacceptable." These assessments will not be ratings, but will contribute to Fitch's analysis of new-issue RMBS transactions. Assessments may result in modest benefits to expected losses.
Fitch noted though that as it gathers more data in the future regarding deal agents' influence on loss mitigation it may apply larger reductions to expected losses.
"Fitch expects the participation of DAs in new RMBS to improve representation-and-warranty enforcement as well as heighten servicer accountability and effectiveness in mitigating losses on distressed loans," the agency said in a news release.
Along with the criteria release, Fitch said that it completed a review of Clayton as a deal agent and determined that it was "acceptable" in performing this role.