Fitch IBCA last week announced it has launched ratings for residential mortgage servicers, partly in response to investor demand after recent turbulence in the industry.
"Recent disruptions in servicing platforms caused by financial difficulties and constant mergers and acquisitions in the industry require an assessment of a servicer's continued viability," said Diane Pendley, a Fitch IBCA analyst.
She said investors, securitization servicers and other market participants had expressed an interest in the ratings.
The borrower's ability and willingness to pay may be a bigger factor than equity, she said. She noted Fitch announced a similar program last year in the sector for commercial mortgage-backed securities.
The new residential ratings will encompass virtually all residential mortgage securitizations, including home-equity, high loan-to-value ratio, alternative-A, manufactured housing, nonconforming and conforming.
Servicers will be categorized into four levels, with the first ratings unveiled next month. The lowest level, for example, would not be acceptable for mortgage-backed securities without special features like overcollateralization or some other additional support or special structural features.
The ratings differentiate among special servicers, primary servicers and master servicers, which provides oversight of the primary servicers. (Special servicers specialize in such areas as delinquent loans.) - ES