S&P: MUFG Union Bank N. A. Residential Mortgage Primary Servicer Ranking Affirmed; Outlook Stable
The ranking reflects:An experienced senior and middle management team, with limited turnover;Continued development and enhancements to internal controls;Low overall portfolio delinquency;Investment in technology and operational improvements;Lack of a controlled access area for the payment processing function; andElevated ASA and abandonment metrics for the customer service and loss mitigation departments compared to peers'. We also reviewed recent audits and reports from MUB's lines of defense, which detailed findings that have been remediated by the business unit and are closed, or are awaiting validation by internal audit. In our view, the findings demonstrated thorough identification and documentation of the necessary corrective actions. There were also no findings noted in MUB's 2015 uniform single attestation program (USAP) report.
Since our prior review (see "Servicer Evaluation: MUFG Union Bank N. A.", published July 15, 2015), MUB has made the following changes:It has begun expanding its geographic servicing footprint into three new states to support the bank's lending objectives;It implemented a customer callback option that allows the customer to request a return call if placed on hold;It completed the rollout of its full scope first line of defense quality control (QC) program;It migrated its servicing procedures to a proprietary procedure and change management system;It implemented an industry standard master servicing system to facilitate loan-level validation of remittance by servicers;It created a new modification program for non-owner occupied properties;It implemented a new leadership training program for emerging and future leaders;It aligned a dedicated training staff resource to the servicing operations;It enhanced its cyber security and information security controls through greater infrastructure and software;It revised its vendor management organization, with it reporting to the second line of defense, and centralized the due diligence and some monitoring responsibilities from the business units to an enterprise-level control function;It implemented an integrated payment intake software solution that allows branches to post mortgage payments in real time;It changed its behavioral scoring model in collections to concentrate on certain risk factors; andIt established an employee development council to foster greater employee engagement, create leadership development opportunities, and solve servicing issues. Our outlook for the ranking is stable. We believe MUB's management team and operations are committed to increasing the bank's portfolio through origination and servicing relationships with Fannie Mae and Freddie Mac, and originations through the Federal Housing Administration. In our view, MUB has an experienced management team, provides an appropriate level of service to its customers, and is committed to strengthening its internal control structure and the monitoring of its operations and staff. We believe this continued product and portfolio transition, along with focus on the operations, will position MUB to continue to provide quality residential prime mortgage loan servicing.