Fitch Affirms Popular Mortgage Servicing's US Residential Subprime Servicer Rating...

Fitch Affirms Popular Mortgage Servicing's US Residential Subprime Servicer Rating at 'RPS2-'

NEW YORK--(Business Wire)--
Fitch Ratings takes the following rating action on Popular
Mortgage Servicing Inc.'s (PMSI) U.S. residential primary servicer
rating:

--Residential primary servicer rating for subprime product
affirmed at 'RPS2-'.

The rating action is based on PMSI's established loan
administration and default management practices, continued technology
improvements, and financial condition of its parent, Popular, Inc.
(rated 'A-/F2' Outlook Negative by Fitch).

PMSI is located in Cherry Hill, NJ, with corporate offices in
Marlton, NJ. PMSI's senior management team averages over 25 years of
industry experience, including seven years with the company. PMSI
continues to improve its servicing technology. Since Fitch's prior
review, the company completed the implementation of call recording
with screen capture software in its customer service and collections
departments. The call recording software is being utilized for
compliance monitoring as well as staff scheduling, performance
reviews, and to identify training opportunities. As of Jan. 31, 2008,
PMSI serviced over 82,600 loans totaling over $11.6 billion. In an
announcement dated Aug. 28, 2008, Popular, Inc. indicated that it has
agreed to sell approximately $1.17 billion in loans and mortgage
servicing assets to various Goldman Sachs affiliates.

As with other subprime servicers, PMSI is experiencing a
substantial increase in delinquencies, and this will continue to put
stress on the servicing operation. Since Fitch's prior review, the
amount of delinquent loans, foreclosures and real estate owned (REO)
properties in PMSI's servicing portfolio has increased significantly.
As of Jan. 31, 2008, total delinquencies including loans 30 days
delinquent through REO increased to 29.5% of the portfolio from 13.8%
at Jan. 31, 2007, based on loan count. As a result, the company
continues to experience a high average call hold time of 61.6 seconds
and an average abandonment rate of 6.04% in its collections
department. However, to help address these volumes, PMSI has expanded
its use of temporary employees in the collections department under a
'temp to hire' program and has reassigned underwriting staff from its
retention department to assist in underwriting loan modifications.

Fitch has reviewed the company's servicing operations and believes
that PMSI has the infrastructure and technology to support its current
servicing portfolio. However, Fitch will continue to monitor PMSI's
ability to manage the significant increase in delinquencies in its
portfolio as it pursues its servicing initiatives.

Fitch rates residential mortgage primary, master, and special
servicers on a scale of 1 to 5, with 1 being the highest rating.
Within some 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 Mortgage Servicers,' dated
Nov. 29, 2006, which is available on the Fitch Ratings web site at
www.fitchratings.com.

Fitch's rating definitions and the terms of use of such ratings
are available on the agency's public site, www.fitchratings.com.
Published ratings, criteria and methodologies are available from this
site, at all times. Fitch's code of conduct, confidentiality,
conflicts of interest, affiliate firewall, compliance and other
relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings, New York
Thomas Crowe, +1-212 908-0227
Mary Kelsch, +1-212-908-0563
Media Relations:
Sandro Scenga, +1-212-908-0278

Copyright Business Wire 2008