Fitch Upgrades Wells Fargo’s Home Equity Servicer Ratings

Fitch Ratings has upgraded Wells Fargo Home Equity Group's primary servicer rating for home equity lines of credit (HELOCs) and specialty servicer rating for second-lien products from RPS2 to RPS1-.

The primary servicer rating actions are based on the Wells Fargo division's developed control environment, continued enhancements to its technology and default management processes, experienced and tenured management team and ability to provide more robust information, Fitch says.

Wells Fargo Home Equity Group is headquartered in San Francisco and is an originator and servicer of HELOC and second-lien fixed-rate products. The company operates in two fulfillment centers and four servicing locations throughout the U.S. and uses retail, consumer direct and broker channels to drive its origination platform.

As of June 30, the division serviced approximately 1.39 million loans totaling $80.5 billion, representing reductions from 1.6 million loans and $85.5 billion, respectively. The portfolio is further broken down as 327,945 fixed-rate second liens and almost 1.07 million HELOCs.

Since Fitch's last review, Wells Fargo acquired Wachovia Bank NA, whose portfolio consisted of 1.3 million HELOCs and second liens, totaling about $72.4 billion as of Feb. 29.

In addition, the servicer enhanced its senior management team through several organizational changes, including the addition of three new positions and completion of the transition of the combined Wachovia and WFHE management team.

Fitch says Wells Fargo continued with its borrower accelerated contact programs for at-risk borrowers and expanded its workout solutions. The division expanded its default management teams in the respective sites, completed several enhancements to its loss mitigation and collection strategies, and leveraged Home Affordable Modification Program mods. Collection payment options were also expanded, and all electronic payment fees for delinquent borrowers were waived.

The servicer has expanded its employee training programs and increased its fraud-awareness campaigns, as well as automated its appraisal ordering processes and centralized its net available equity program through its risk management group. The servicer continues to make upgrades to its servicing systems and indicated that it plans to complete the full systems conversion of the legacy Wachovia platform by the middle of 2010.

SOURCE: Fitch Ratings


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