Fitch Upgrades ResCap’s RMBS Master Servicer Rating

Fitch Ratings has upgraded Residential Capital LLC's (ResCap) U.S. residential master servicer rating to RMS3 from RMS4.

The upgrade reflects the continuing evolution of ResCap's financial condition through the company's current difficult cycle, Fitch says. On Jan. 8, Fitch placed ResCap's issuer default rating (IDR) of ‘D’ on rating watch positive, reflecting the substantial government support provided to ResCap's parent, GMAC LLC, as well as the fact that GMAC has continued to provide financial support to ResCap following GMAC's recapitalization.

The rating action also reflects the company's experienced and tenured management team, solid training programs, extensive master servicing experience, as well as the company's proficient use of technology to effectively oversee and monitor the activities of its primary servicers.

Since the prior review, ResCap has made operational and technological improvements to increase efficiencies across its servicing platform. ResCap improved the overall quality of its training processes by expanding its training programs and significantly increasing training hours for the master servicing staff, increased processing efficiencies through systems upgrades, and enhanced its tracking and reporting capabilities on modified loans.

Additionally, ResCap continues to improve its focused primary servicer monitoring processes, including the development of a servicer scorecard.

ResCap's master servicing operations are located in Burbank, Calif. As of June 30, ResCap master serviced over 584,000 loans with an unpaid principal balance of over $94.5 billion. The portfolio is composed of 42% subprime, 24.7% Alt-A, 10.2% prime, 12.1% closed-end second liens, and 8.6% high loan-to-value product by loan volume.

SOURCE: Fitch Ratings

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