Fitch Rates Residential Credit Solutions, Vericrest

Ratings has taken actions on its servicer ratings for Residential Credit Solutions Inc. (RCS) and Vericrest Financial Inc. Fitch has upgraded RCS' rating for subprime product to RPS3+ from RPS3- and assigned the company a special servicer rating of RSS3+. The rating actions are based on RCS' experienced management team, effective loan administration processes and focused default management practices, Fitch says. The special servicer rating reflects RCS' ability to effectively manage and liquidate nonperforming loans and real estate owned (REO) assets. The rating actions also reflect the financial condition of RCS, a non-publicly rated entity, as financial condition is an important component of Fitch servicer ratings. RCS operates its servicing platform from Fort Worth, Texas, with a servicing staff of 114 full-time equivalents. As of Feb. 28, RCS serviced 13,544 loans with an unpaid principal balance (UPB) of over $2.8 billion – up from 7,096 loans with a UPB of over $1.1 billion at May 31, 2009. The portfolio consists of 83% subprime, 15% Fannie Mae, 1% Federal Housing Administration/Veterans Affairs and 1% high loan-to-value product by loan volume. Since Fitch's previous review, RCS has continued to make operational and technological enhancements to increase efficiencies across the platform. RCS improved its staff development through increased training hours across all departments, implemented enhancements to its website for loss mitigation and modification status updates, and enhanced its loss mitigation decisioning tool to support all government- and investor-specific loss mitigation programs. Also during the period, RCS consolidated all servicing operations into its Fort Worth location while maintaining its Los Angeles servicing facility for future growth. Meanwhile, Vericrest, a privately held financial services company owned by Lone Star Fund VI, has had its primary servicer rating for subprime product upgraded to RPS3+ from RPS3. Fitch says the rating action is based on Vericrest's experienced management team, enhanced control environment, and focused loan administration and default management practices. The rating action also reflects the financial condition of Vericrest, a non-publicly rated entity. Lone Star is currently using Vericrest as a captive servicer for its U.S. residential mortgage acquisitions. Vericrest operates its servicing platform from offices located in Oklahoma City; San Diego; East Hanover, N.J.; and Dallas. As of March 31, Vericrest serviced 49,583 loans with a UPB of over $6.4 billion, -down from 59,397 loans with a UPB of over $7.8 billion on June 30, 2009. The portfolio consists primarily of subprime product, 82.8% of which is serviced for non-agency residential mortgage-backed security transactions, 12.9% for its own portfolio and 4.3% for third parties by loan volume. Since Fitch's previous review, Vericrest has continued to improve its servicing platform through the implementation of an internal audit structure and various technology improvements throughout the company. Further, several loan administration and default management processes initially implemented at Fitch's 2009 review have seasoned over the last year, the rater says. SOURCE: [link=]Fitch Ratings


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