Fitch Assigns Residential Mortgage Servicer Rating to RoundPoint Mortgage Servicing Corporation
August 15 2011 - 3:46PM
Business Wire
Fitch Ratings takes the following rating actions on RoundPoint
Mortgage Corporation's (RoundPoint) U.S. residential mortgage
servicer ratings:
--U.S. Residential primary servicer rating for Subprime product
assigned at 'RPS3';
--U.S. Residential Special Servicer rating assigned at
'RSS3'.
The rating actions are based on RoundPoint's ability to
establish a reliable servicing platform since its inception in
2007. The ratings reflect RoundPoint's capable default performance;
focused, 'high touch' servicing approach; and advanced servicing
technology. However, the ratings also reflect RoundPoint's limited
operating history, especially with respect to servicing loans in
RMBS transactions, and developing internal control environment. In
addition, the ratings reflect the financial condition of
RoundPoint, a non-publicly rated entity, as financial condition is
an important component of Fitch's servicer ratings. The ratings
also reflect Fitch's overall concerns for the U.S. residential
servicing industry which include the ability to maintain high
performance standards while addressing the rising cost of servicing
and changes to industry practices, which are likely to be mandated
by regulators and other parties.
RoundPoint, a wholly owned subsidiary of RoundPoint Financial
Group, Inc., a part of the Tavistock Group of companies, was
founded in 2007 to provide asset management and 'high touch'
servicing for investors of distressed residential mortgage assets.
A sister company, RoundPoint Mortgage Company, is a national
residential lender.
RoundPoint is headquartered in Charlotte NC, with an additional
servicing site in Henderson NV. As of Jan. 31, 2011, RoundPoint
serviced over 22,200 loans with a UPB of $2.95 billion. Subprime
product made up approximately 23% of the portfolio by loan volume,
and special servicing accounted for 42% of the portfolio by loan
volume. RoundPoint's client base consists of commercial banks,
credit unions, hedge funds, and the Federal Deposit Insurance
Corporation (FDIC).
RoundPoint's loss mitigation department is organized around
investor-specific teams comprised of a portfolio manager and
portfolio specialists. The loss mitigation specialists are
responsible for all assigned loans that are 90 or more days
delinquent or that have been referred to the loss mitigation
department until a resolution is reached. RoundPoint developed a
loss mitigation tool that incorporates investor specific net
present value calculations and allows loan level data access by
investors through the company's investor web portal. This
proprietary system tracks loss mitigation recommendations and
investor approvals.
Fitch recently completed its operational review of RoundPoint's
servicing operations and believes the company has established a
reliable servicing platform with the capacity and infrastructure to
maintain and increase its residential servicing operations.
However, Fitch will continue to monitor the company's financial
condition and its impact on the company's performance and
operational capabilities, while pursuing its growth initiatives in
a high delinquency environment.
In November 2010, Fitch assigned a Negative Outlook for the
entire U.S. Residential Mortgage Servicer ratings sector on
increased concerns surrounding alleged procedural defects in the
judicial foreclosure process. Responses to Fitch's recent survey of
its rated servicers regarding internal procedures used to verify
and execute foreclosure affidavits indicate that all servicers are
taking this matter seriously and are continuing to work to resolve
any issues uncovered. Fitch may place an individual servicer's
ratings on Rating Watch Negative and/or downgrade the ratings if
the servicer does not diligently and timely review its processes
and take immediate corrective action to remediate any foreclosure
action or documentation failures. Fitch may take similar actions on
a servicer's ratings if the impact of the additional costs that
must be borne by the servicer significantly affects its financial
condition. Until those conclusions are reached, the Negative
Outlook on the sector affects all U.S. RMBS servicers.
Fitch rates residential mortgage primary, master, and special
servicers on a scale of 1 to 5, with 1 being the highest rating.
Within some of these rating levels, Fitch further differentiates
ratings by plus (+) and minus (-) as well as the flat rating. For
more information on Fitch's residential servicer rating program,
please see Fitch's report 'Rating U.S. Residential and Small
Balance Commercial Mortgage Servicer Rating Criteria', dated Jan.
31, 2011 which is available on the Fitch Ratings website at
'www.fitchratings.com'.
Additional information is available at
'www.fitchratings.com'.
Applicable Criteria and Related Research:
'Global Rating Criteria for Structured Finance Servicers' (Aug.
13, 2010);
'U.S. Residential and Small Balance Commercial Mortgage Servicer
Rating' (Jan. 31, 2011) .
Applicable Criteria and Related Research:
U.S. Residential and Small Balance Commercial Mortgage Servicer
Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=600065
Global Rating Criteria for Structured Finance Servicers
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547305
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