ResCap Ratings Improve Across-The-Board

Ratings has upgraded several mortgage servicer ratings for Residential Capital LLC (ResCap), which was recently added to the Treasury's list of Making Home Affordable participating servicers. ResCap's residential primary servicer for prime, Alt-A, subprime, HLTV and HELOC products were all upgraded from RPS4 to RPS3, and its specialty-subservicer and special servicer ratings where upgraded from RSS4 to RSS3. The upgrades reflect the continuing evolution of ResCap's financial condition through the company's current difficult cycle, Fitch says. On Jan. 8, Fitch placed ResCap's 'D' Issuer Default Rating 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 ratings are also based on ResCap's management team, technology platform, default management practices and demonstrated ability to provide focused subservicing for third parties, the agency adds. Since the last review, the company has made operational and technological improvements to increase efficiencies across the servicing platform. ResCap added over 300 new servicing staff, primarily in default areas, to address increased modification and defaulted loan activity, functionalized its bankruptcy and foreclosure process under a single management structure to streamline and enhance efficiencies in workflow processes, and enhanced its default risk scoring model to identify borrowers subject to imminent default, prioritize call center usage and facilitate greater borrower segmentation by risk. As of April 30, ResCap serviced nearly 2.7 million loans with an unpaid principal balance (UPB) of over $386.3 billion, down from 2.8 million loans with a UPB of $400.3 billion as of year-end 2008. The servicing portfolio was composed of 14.1% non-agency prime first and second liens, 8.7% subprime first and second liens, 7.61% Alt-A, 2.6% HLTV and 9.4% HELOC products, with the balance consisting of conventional conforming, Federal Housing Administration, Veterans' Affairs, and manufactured housing loans. ResCap continues to operate its primary, special and subservicing operations from its servicing centers in Waterloo, Iowa; Dallas;and Fort Washington, Pa. During the year, the company opened a new servicing site in Carlsbad, Calif., to expand its default management capabilities for its special-servicing growth initiatives. ResCap continues to use offshore resources for customer-facing call center and inbound collection efforts, as well as for back-office functions to support various loan administration and default management processes. SOURCE: Fitch Ra


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