Fitch Takes Actions On Home Loan Services’ Ratings

Ratings has affirmed Home Loan Services' (HLS) servicer ratings for subprime and Alt-A products at RPS2 and upgraded the company's special servicer rating from RSS2- to RSS2. Fitch has also removed the servicer ratings from Rating Watch Evolving. The rating actions reflect HLS' solid management team, strong control environment, and effective default management and loss mitigation capabilities, the rating agency says. The upgrade of the special servicer rating reflects continued enhancements to the company's processes in preparation for changing market conditions and to better position the company for third-party special servicing opportunities. The ratings also reflect the financial condition of HLS' indirect parent, Merrill Lynch & Co., which was acquired by Bank of America in January. Fitch's long-term Issuer Default Ratings for both Merrill Lynch and Bank of America are currently A+ with a Stable Rating Outlook. The removal of HLS' servicer ratings from Rating Watch Evolving reflects the company's more stable environment following Bank of America's acquisition of Merrill Lynch. Headquartered in Pittsburgh, with a call center located in nearby Upper St. Clair, Pa., HLS services Alt-A and subprime loans, including second-lien subprime loans. As of March 31, HLS serviced over 204,000 loans totaling $28.8 billion – a decrease from over 292,000 loans totaling $43 billion as of June 30, 2008. The portfolio consists of approximately 84% subprime and 16% Alt-A product. HLS does not special service for third parties; however, the special servicer rating is based on the company's ability to service and liquidate defaulted loans. Since Fitch's prior review, HLS has implemented improvements to its call center technology, including work schedule management software for all customer contact areas, and the company has enhanced its abilities to monitor deal triggers. In addition, HLS continues to enhance its loss mitigation processes in an effort to reduce paper usage and leverage its Web site to gather financial information from borrowers seeking assistance in resolving delinquencies. SOURCE: Fitch

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