TEXT-Fitch affirms Nationstar Mortgage servicer ratings

Tue Dec 11, 2012 2:17pm EST

Dec 11 - Fitch Ratings has taken the following rating actions for Nationstar
Mortgage LLC's (Nationstar) U.S. residential servicer ratings:

--Residential primary servicer rating for subprime product affirmed at 'RPS2',
assigned Outlook Stable;
--Residential primary servicer rating for Alt-A product assigned 'RPS2', Outlook
Stable;
--Residential special servicer rating assigned 'RSS2', Outlook Stable;
--Residential master servicer assigned 'RMS2+', Outlook Stable.

The rating actions are based on Nationstar's effective default performance,
comprehensive servicing technology, and experienced servicing management team.
However, the ratings also take into account Nationstar's aggressive portfolio
growth and the procedural deficiencies that were contained in the most recent
Regulation AB report for Nationstar for the year ended Dec. 31, 2011, which have
been addressed by the company.

The master servicer rating reflects the established master servicing platform
that Nationstar acquired from Aurora Bank FSB (Aurora). In addition, all of the
servicer ratings incorporate the financial condition of Nationstar's majority
owner, a Fortress Investment Group company. Fortress Investment Group is rated
'BBB'; Outlook Stable by Fitch.

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.

Nationstar is headquartered in Lewisville, TX, with additional servicing sites
in Houston, TX, Scottsbluff, NE, Indianapolis, IN, and Littleton, CO. As of June
30, 2012, Nationstar's primary and special servicing portfolio was comprised of
over 600,000 loans totaling $99.2 billion, a substantial increase from 397,000
loans totaling $65.7 billion as of June 30, 2011. The primary and special
servicing portfolio included over 89,000 first and second lien subprime loans
totaling $13.6 billion and 45,000 Alt-A loans totaling $12 billion, with over
263,000 loans totaling $46.6 billion in special servicing. The master servicing
portfolio was comprised of over 477,000 loans totaling $117.3 billion.

Since Fitch's prior review, Nationstar completed its acquisition of Aurora's
residential mortgage servicing platform and continues its integration of
Aurora's servicing sites in Scottsbluff, Indianapolis, and Littleton. The master
servicing operation has remained in Littleton with the same management, staff,
technology, and policies and procedures. Fitch views this positively as the
master servicing operation was effective and well-managed prior to its
acquisition by Nationstar.

In August 2011, Nationstar became the subservicer of the First Tennessee Bank
mortgage portfolio which was previously subserviced by MetLife Home Loans
(MLHL). MLHL's parent, MetLife Bank, NA, is under a consent order with the
office of the Comptroller of the Currency (OCC). In addition, Aurora is under a
consent order with the Office of Thrift Supervision (now part of the OCC).
Nationstar indicated that it continues to work indirectly with the OCC to comply
with the consent order requirements. The company implemented a single point of
contact program and developed a servicing oversight control program that
performs over 100 independent quality control tests that monitor ongoing
compliance with the consent order requirements.

In addition, Nationstar continues to build its internal audit program. The
company hired a new director of internal audit in October 2011, and completed an
audit risk assessment, initial audit plan, and staffing model. The initial audit
plan includes all high risk areas in servicing within the first 18 months. In
the meantime, the company continues to rely on its robust quality control and
compliance functions.

Fitch has reviewed Nationstar's servicing operations and believes the company
has the management, infrastructure, and technology to support its current
servicing portfolio. Fitch will continue to monitor Nationstar's ability to
maintain its operational performance as it pursues its servicing initiatives in
this high delinquency environment.

The U.S. Residential Mortgage Servicer ratings sector Outlook remains Negative.
On Nov. 4, 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.

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'.

Additional information is available at 'www.fitchratings.com'. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.

Applicable Criteria and Related Research:
--'Global Rating Criteria for Structured Finance Servicers' (Aug. 16, 2010);
--'U.S. Residential and Small Balance Commercial Mortgage Servicer Rating
Criteria' (Jan. 31, 2011).

Applicable Criteria and Related Research:
Global Rating Criteria for Structured Finance Servicers
U.S. Residential and Small Balance Commercial Mortgage Servicer Rating Criteria
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