Fitch Affirms CitiMortgage's U.S. RMBS Primary Servicer Rating; Downgrades Master Servicer Rating
OREANDA-NEWS. Fitch Ratings has taken the following rating actions on the U.S. residential servicer ratings for CitiMortgage, Inc. (CMI):
--Residential primary servicer rating for prime product affirmed at 'RPS2+', Outlook Stable;
--Residential master servicer rating downgraded to 'RMS2+' from 'RMS1', Outlook Stable.
The affirmation of CMI's primary servicer rating for prime product reflects sustained improvement in internal audit and Regulation AB (Reg AB) results, continued investments in servicing technology, and solid call handling metrics. CMI's primary servicing operation did not have any instances of material non-compliance in the Reg AB report for the year ended Dec. 31, 2014, a decrease from one instance last year. The speed to answer for both the customer service and collection departments in primary servicing averaged less than 17 seconds with an average abandonment rate of less than 1% during the current review period.
The downgrade of CMI's master servicer rating reflects updates to Fitch's master servicer rating criteria published in April 2015 and two instances of material non-compliance identified in the most recent Reg AB report for the year ended Dec. 31, 2014. Fitch's framework for analyzing master servicers focuses on effectiveness and operational capacity, servicer oversight, and data management. Within each of these three broad areas, Fitch evaluates a number of components to develop a comprehensive view of the master servicing operation. In the case of CMI, the increased emphasis on key person risk had a negative impact on the assessment of the master servicing operation's management and staffing areas, while the two instances of material non-compliance in the Reg AB report negatively impacted the assessment of the procedures and controls areas.
At 'RMS2+', CMI continues to be a highly rated master servicer that demonstrates high performance in overall master servicing ability. In addition to master servicing legacy RMBS transactions, CMI has been active in newly issued RMBS transactions, performing master servicing functions on several Redwood Trust issued Sequoia residential mortgage pass-thru certificates.
Both of the servicer ratings incorporate the company's financial condition. CMI's parent, CitiBank, NA (CBNA) is rated 'A+' with a Stable Outlook by Fitch. A company's financial condition is a component of Fitch's servicer rating analysis.
CMI's servicing operations are headquartered in O'Fallon, MO with five other domestic servicing sites and several off-shore affiliate and vendor sites. The majority of servicing employees are located in O'Fallon, Tucson, AZ, and Irving, TX. The master servicing operation is located in Irving. Off-shore affiliate and vendor sites handle a significant portion of customer service and front-end collection calls in the Philippines and back-office functions in India. In addition, a number of servicing employees participate in a work from home program.
As of June 30, 2015, CMI was primary servicing over 1.7 million loans totaling $261.8 billion. The primary servicing portfolio included approximately 245,000 non-agency prime loans totaling $68.9 billion. As of June 30, 2015, the master servicing portfolio was comprised of over 66,000 loans totaling $15.6 billion.
CMI continues to update and enhance its servicing systems with projects during the current review period focused on letters and statements related to the Consumer Financial Protection Bureau (CFPB) requirements, connecting mortgage systems to CitiBank's overall strategy for customer interaction, and evaluating upgrades or replacements for several default servicing systems. Fitch believes that CMI continues to maintain a capable servicing operation with the staff, procedures, controls, default management processes, and technology to manage its current servicing portfolio.