Fitch Ratings has downgraded the mortgage servicing operation at Wells Fargo Home Mortgage as the bank reduced the unpaid principal balance and made a strategy shift towards agency and portfolio loans.
The rating changes are as follows:
· Residential primary servicer rating for Prime product to 'RPS2+' from 'RPS1-'/Stable;
· Residential primary servicer rating for Alt-A product to 'RPS2+' from 'RPS1-'/Stable;
· Residential primary servicer rating for Subprime product to 'RPS2+' from 'RPS1-'/Stable.
"The composition and relative complexity of the servicing portfolio differ from other Fitch-rated RPS1- servicers, which is reflected in the assessment," the report said. "The downgrade also reflects modest investment in customer service technology and default administration metrics and processes that remain below Fitch's expectations for RPS1- servicers."
In January 2023, Wells Fargo
The positives are the mortgage business' experienced management team, which has a viable strategic vision; a strong risk management system in place; and what Fitch termed an efficient technology platform.
As of June 30, Wells Fargo serviced $361.4 billion for third party investors, down from $455.5 billion one-year prior, its
During Fitch's review period, Wells Fargo sold just under 70% of its non-agency MSRs during the prior 12 months.
The company recently announced an agreement where it
The report said Wells Fargo uses MSP throughout the loan cycle, from post-origination on-boarding through liquidation.
The company has staff with strong expertise in managing the delinquent pipeline through the default lifecycle, primarily for agency loans, the report noted. But it continued that Wells Fargo's "performance metrics in collections and default management have shown weaker performance trends compared to other Fitch-rated RPS1- servicers."
But the company has not added any enhanced technology besides the standard MSP platform during the time covered in this report.
"WFHM provides borrowers with self-service options through its website. These options include making payments, reviewing account transactions, and accessing statements and other account information," the report said.
The company's metrics for servicing-related tasks like loan boarding, cash management, escrow administration, customer service and payoffs are in line with other segment participants rated by Fitch.
But the Fitch statement also noted that Wells Fargo's 2025 Regulation AB report identified material non-compliance related to custodial accounts for several securitization trusts.
"These accounts were not held at a federally insured depository institution that met rating requirements in the underlying securitization agreements," Fitch said.
