It's a tough time to be a servicer, no doubt, as some of the biggest names - i.e., Fairbanks Capital Corp. - have been shaken with regulatory, capacity and then rating issues. That said, Fitch Ratings is affirming its RPS1' view on HomEq Servicing Corp.'s subprime and Alt-A primary servicing ratings, and its RSSI1' on its special servicer ratings.
HomEq is a subsidiary of Wachovia Corp. As such, the company is primary servicer on more than $16.3 billion in loans, many of which were originated by former First Union subsidiary The Money Store.
The firm has also been increasing its business with major Wall Street firms, signing on as servicer on dealer issuance vehicles, for example. HomEq services collateral for New Century, WMC Mortgage and others.
In a release, Fitch said it would continue to monitor HomEq's growth process. Rapid growth in the late 1990s, followed by a tumultuous credit/default environment, has taken its toll on the servicing business.
"Back when they rated us eight months ago, we had made the decision to start working with third parties," said Richard Lee, an executive vice president at HomEq. Lee felt that now was an important time for an affirmation.
Ironically, Lee was formerly at Fairbanks, but left the firm before it took on the servicing of the ContiMortgage collateral, which preceded Fairbanks taking on the EquiCredit portfolio. These acquisitions are associated with the Fairbank's subsequent capacity issues.