Moody's Investors Service and Fitch Ratings assigned provisional ratings of ‘P-1’/ ‘F-1’ to Wells Fargo’s $100 million term ABS, Series 2013-MM1 deal that is backed by collateralized servicer advance receivables.

The proceeds of the notes are used to finance servicing advance receivables. Along with the term notes the trust will also offer draw notes and variable funding notes. Moody's will only rate the term notes.

Moody's and Fitch said that the ratings of the term notes are based on Wells Fargo’s ‘Prime-1’ / 'F1+' short term rating.    

In January at the American Securitzation Forum’s securitization industry conference in Las Vegas, the securitization of servicer advances was one area the market pegged for growth.

Industry sources said that the as servicing moved away from big banks into the hands of smaller, non-bank servicers; these players were likely to have a greater need to access alternative funding sources like the securitization market.

“There is a ready-made need on the point of the issuer and it’s a legitimate asset class from the point of view of the investors -- when that happens, it’ usually a good thing because it creates a sustainable asset class,” said Gagan Singh, chief investment officer at PNC Bank on one of the panels at the January gathering.   

Ocwen’s Home Loan Servicing Solutions and Nationstar both issued securitizations in January that highlight this trend of non-bank servicers coming to market with term ABS backed by servicer advance receivables.


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