Moody's Investors Service has placed GMAC-RFC's servicer quality rating on review for possible downgrade.

The following was put on review by the rating agency: 'SQ3+' as a primary servicer of prime residential mortgages; 'SQ3' as a primary servicer of subprime residential mortgage loans; 'SQ3' as a primary servicer of second lien loans; 'SQ3' as a primary servicer of HLTV residential mortgage loans and 'SQ3' as a special servicer.

Moody's cited a decline in GMAC-RFC's business strength. The agency said that there is an increased chance of a reorganization via bankruptcy for its corporate parent, Residential Capital (ResCap). ResCap is currently considering  the option based on a Securities and Exchange Commission filing. Please see story.

Analysts also noted the higher uncertainty of further liquidity and capital support from Ally Financial, which is GMAC-RFC's ultimate corporate parent.

ResCap recently said that it did not make an April 17 interest payment on its senior notes. Unless paid within 30 days, the missed payment will lead to a default on the notes, the company said. On April 18, Moody's downgraded ResCap's senior unsecured debt rating to 'C' from 'Ca'. The rating of Ally Financial, which is at  'B1', was not impacted (see related story).

Over the review period, Moody's will focus on ResCap's financial stability as well as the company's pursuit of strategic alternatives, and their impact on the master servicing operations.

GMAC-RFC's master servicing portfolio reached 303,177 loans for an unpaid principal balance of roughly $52.8 billion as of April 30. As a master servicer, the company oversees 39 primary servicers and one special servicer.

The previous rating action for GMAC-RFC's SQ rating was on March 13. At that time, the agency affirmed GMAC-RFC's master servicer quality rating of 'SQ3+'.

In other servicing news, Standard & Poor's revised its outlook to positive on American Home Mortgage Servicing as a residential special loan servicer.

The rating agency also affirmed its ABOVE AVERAGE rankings on the company as a residential loan mortgage servicer and residential subprime mortgage servicer, and affirmed its AVERAGE rankings for residential subordinate-lien and residential special servicing. The outlook is stable for prime, subprime, and subordinate-lien servicing.

S&P revised the outlook for residential special servicing to reflect the enhancements the servicer has made to proprietary technology, stability in management, and the development of an "effective" staff dedicated to special loan servicing.

"The ranking affirmations reflect our opinion that the company continues to maintain a sound environment with effective risk management, satisfactory customer service, and solid default management, while continuing to promote home retention," S&P analysts wrote. 

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