TEXT-S&P affirms First National Financial servicer rank

Fri Nov 30, 2012 10:34am EST

OVERVIEW

-- We affirmed our ABOVE AVERAGE ranking on First National Financial L.P. as a residential mortgage servicer.

-- We also affirmed our ABOVE AVERAGE subrankings for management and organization and loan administration.

-- Our rankings reflect the company's stable and experienced management team and efficient servicing operations.

Nov 30 - Standard & Poor's Ratings Services today affirmed its ABOVE AVERAGE ranking on First National Financial L.P. (FNF) as a residential mortgage servicer in the Canadian market. The outlook is stable. In addition, we affirmed our subrankings for management and organization and loan administration at ABOVE AVERAGE. In accordance with our criteria, we believe the financial position to be SUFFICIENT. MAJOR RANKING FACTORS Strengths

-- Effective and tenured senior management;

-- Sound technology environment; and

-- Manageable staff turnover. Weaknesses

-- Less than significant tenure of middle management and some staff. The overall ranking reflects our view of FNF's stable and experienced management team and staff and more than 20-year history of originating and servicing residential loans for its own book and for third-party investors. The ranking also reflects our view of the company's efficient technology, regularly scheduled system and process enhancements, sound internal controls, sound default management, and effective customer service. In our opinion, FNF has built an effective management team that continually seeks to improve the company's overall operations. The company has successfully reengineered its processes over the past several years, in our view, and now operates in a virtually paperless environment with improved workflow. We believe FNF's ongoing focus on staff training and development, along with its prudent risk management methodologies, have supported the company's consistent growth. FNF continues to employ enhanced technologies, and continues to improve its borrower Web site. Moreover, the company has opened an office in Quebec to further serve borrowers in provinces in the eastern sections of Canada. Senior management has indicated that it recognizes the importance of a well-trained staff and has made continued enhancements to the training it provides to all employees. The outlook is stable. FNF continues to exhibit strong and consistent growth in its residential loan portfolio. The residential portfolio now totals approximately 170,000 loans with an aggregate unpaid principal balance (UPB) of approximately $38 billion. We believe the company maintains robust origination channels that promote continued, managed growth. We expect that FNF will maintain its position as a leading originator and servicer of residential mortgages. Standard & Poor's believes the company to be well structured, organized, and directed to handle future growth. RELATED CRITERIA AND RESEARCH

-- Servicer Evaluation: First National Financial L.P., Aug. 9, 2010

-- Revised Criteria For Including RMBS, CMBS, And ABS Servicers On Standard & Poor's Select Servicer List, April 16, 2009

-- Servicer Evaluation Ranking Criteria: U.S., Sept. 21, 2004

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