Text-Fitch affirms residential servicer rtng for Citimortgage

NEW YORK, December 22 (Fitch) Fitch Ratings takes the following rating actions
on the U.S. residential servicer ratings for CitiMortgage, Inc.
(CMI):
--U.S residential master servicer rating affirmed at 'RMS1';
--U.S. residential primary servicer rating for prime product affirmed at
'RPS2+';
--U.S. residential primary servicer rating for Alt-A product affirmed at
'RPS2+';
--U.S. residential primary servicer rating for subprime product affirmed at
'RPS2+'.
The rating actions are an affirmation of the actions taken in June 2011, which
were based on CMI's foreclosure processing deficiencies as highlighted by the
Consent Orders issued by the Office of the Comptroller of the Currency (OCC),
its instances of SCRA loan non-compliance, and Fitch's concerns regarding its
staffing strategy. Over the review period, the servicer indicated it has worked
toward implementation of the changes necessary to meet the regulatory and
compliance requirements outlined in the Consent Orders.
The ratings also reflect CMI's investment in its technology, the policies and
procedures overhaul undertaken over the review period, and its comprehensive
and
long-standing risk control self assessment (RCSA) program. The master servicing
rating reflects CMI's solid platform and strong servicer oversight and investor
reporting capabilities.
Finally, the ratings 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. The
ratings were determined in accordance with Fitch's criteria 'Rating U.S.
Residential and Small Balance Commercial Mortgage Servicer Rating Criteria' and
'Global Rating Criteria for Structured Finance Servicers' which are available
on
the Fitch Ratings web site at 'www.fitchratings.com'.
CMI's activities take place over 11 separate locations; however, the majority
of
employees are located in the St. Louis, MO, Tucson, AZ, and Dallas, TX
locations. As of Fitch's review, there were a total of 5,827 full-time
equivalent (FTE) servicing employees. As of July 31, 2011, CMI's portfolio had
a
unpaid principle balance (UPB) of $510,099,348,074 with 3,479,556 loans, an
11.4% decrease (based on number of loans) from Sept. 30, 2010's
$589,588,591,708
UPB and 3,927,615 loans. The portfolio consists of 74.9% GSE product, 20.9%
non-GSE prime product, 1.9% Alt-A product, and 1.7% subprime product. The
remainder was composed of HLTV and CRA loans.
As of Fitch's review, CMI had made several enhancements to its default policies
and procedures, including an enhancement and rewrite of all agent procedures
and
created 650 single points of contact (SPOC) positions. Overall, however, the
number of FTEs across the organization declined 17.3% vs. a decline in
portfolio
assets of approximately 11.4%. Fitch remains concerned about the servicer's
reduction of collection and loss mitigation agents, despite the addition of the
SPOC agents. Fitch believes, however, that CMI's long-standing RCSA program and
its continued focus on improved processes and controls are a positive for the
servicer as they work towards achieving compliance with the Consent Orders.
Fitch believes that CMI continues to maintain a capable servicing operation
with
the staff, procedures, controls, default management processes, and technology
to
manage its current servicing portfolio. Fitch will continue to monitor the
company's ability to maintain performance as it pursues its servicing
initiatives in this high delinquency environment.
In November 2010, Fitch assigned a negative outlook to 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 web site at 'www.fitchratings.com'.
Contact:
Primary Analyst
Shashi Srikantan
Director
+1-212-908-0393
Fitch Inc
One State Street Plaza
New York, NY 10004
Secondary Analyst
Thomas Crowe
Senior Director
+1-212-908-0227
Committee Chairperson
Grant Bailey
Managing Director
+1-212-908-0544