Fitch Takes Action On Servicer Ratings For IndyMac, Financial Freedom

Fitch Ratings has upgraded IndyMac Federal Bank FSB's U.S. residential servicer ratings and affirmed the residential servicer ratings for IndyMac subsidiary Financial Freedom Senior Funding Corp.

For IndyMac, Fitch upgraded the company's residential primary servicer rating for Alt-A products to RPS2 from RPS3, for subprime products to RPS2 from RPS3, and for prime products to RPS2 from RPS3. Fitch also upgraded IndyMac's residential special servicer rating to RSS2 from RSS3. Fitch has removed the ratings from Rating Watch Evolving.

Fitch completed its operational review of IndyMac in January, confirming that although the company experienced some operational challenges and disruptions during the past year, it continues to be a capable servicer with the demonstrated ability to adequately manage their residential mortgage portfolio. The ratings incorporate the financial strength of the Federal Deposit Insurance Corp. (FDIC), which was appointed as conservator by the Office of Thrift Supervision on July 11, 2008.

IMFB operates its servicing platform from three locations: Austin, Texas; Kalamazoo, Mich; and Pasadena, Calif. As of Sept. 30, 2008, IndyMac serviced a portfolio of 724,805 loans with an unpaid principal balance (UPB) of nearly $179 billion. The portfolio is composed of 41% Fannie Mae/Freddie Mac, 40% Alt-A, 9% home equity line of credit, 6% closed-end second-lien and 3% subprime product by loan volume.

On Dec. 31, 2008, the FDIC signed a letter of intent to sell the banking operations of Indymac Federal Bank, including the mortgage operations, to IMB HoldCo. LLC, a thrift holding company owned by a consortium of private equity investors controlled by IMB Management Holdings LP.

Fitch will continue to monitor the proposed sale of the servicing platform and the potential effect the change of ownership may have on its financial condition, ability to maintain long-term stable funding, and loan servicing and operational capabilities.

Fitch Ratings has affirmed Financial Freedom's residential primary specialty-reverse servicer rating affirmed at RPS3. Fitch also removes the ratings from Rating Watch Evolving. As of Nov. 30, 2008, Financial Freedom serviced a portfolio of 161,375 loans with a UPB of approximately $22.28 billion. The portfolio is comprised primarily of Home Equity Conversion Mortgage product (93.1%) by loan volume.

SOURCE: Fitch Ratings


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