TEXT-S&P afms one, withdraws two rankings on MU Frontier Servicer

Mon Dec 17, 2012 2:16am EST

Dec 17 -

OVERVIEW

-- MUFR services a wide variety of loans, primarily commercial loans, residential mortgage loans, and consumer loans. It is Japan's largest servicer.

-- The company has a proven track record as a residential loan special servicer, and continues to focus on enhancing its internal controls.

-- We have affirmed our STRONG servicer evaluation ranking on MUFR as a residential loan special servicer. The outlook on the ranking remains stable.

-- We have withdrawn our STRONG servicer evaluation rankings on MUFR as a commercial loan special servicer and consumer finance special servicer at the company's request.

Standard & Poor's Ratings Services today said that it has affirmed its STRONG servicer evaluation ranking on MU Frontier Servicer Co. Ltd. (MUFR) as a residential loan special servicer. The outlook on the ranking remains stable. MUFR remains on Standard & Poor's Select Servicer List in the above category.

At the same time, we withdrew our STRONG servicer evaluation rankings on MUFR as a commercial loan special servicer and consumer finance special servicer at the company's request.

MUFR is a consolidated subsidiary of the Bank of Tokyo-Mitsubishi UFJ Ltd. (A+/Stable/A-1). The predecessor of MUFR is APLUS Servicer Co. Ltd., established in July 1999 as a wholly owned subsidiary of APLUS Co. Ltd. The company changed its name to The Frontier Servicer Co. Ltd. (FSC) in January 2000. The Ministry of Justice licensed FSC as Japan's 28th servicer in February 2000 under Japan's Law Concerning Special Measures for the Servicing Business (Servicer Law). FSC merged with NS Servicer (NSS) in October 2004, and merged with Tokyo Diamond Servicing and Revitalization Co. Ltd. in October 2005, changing its name to MUFR. In April 2007, MUFR merged with NBSC Corp.

MUFR is the largest servicer in Japan, servicing a wide variety of loans, primarily residential mortgage loan receivables, commercial loan receivables, leasing-fee receivables, and consumer loan receivables. Its head office is in Nakano Ward, Tokyo, and it has two spun-off offices in Nakano Ward, an office annex in Chiyoda Ward, Tokyo, sales offices in Osaka and Nagoya, and 10 branch offices throughout Japan.

We base today's ranking affirmation primarily on our view of the following: (1) the company's robust track record in servicing residential loan receivables; (2) its continued focus on enhancing internal controls; and (3) its efforts to provide rich training programs for its employees.

Our ranking affirmation reflects an overall evaluation of MUFR as a residential loan special servicer, based on our analysis and assessment of various factors, including the following:

-- The company's track record as a residential loan special servicer;

-- The servicing experience of its management team and staff;

-- Its internal policies and procedures;

-- Its business expansion plans;

-- The implementation and results of its internal audits;

-- Its implementation of internal controls;

-- Its internal training programs;

-- Its disaster contingency plans, including data backup systems, and the execution of system resumption tests;

-- The quality and capacity of the computer systems that support the company's day-to-day business operations;

-- Its loan boarding process and verification system;

-- The decision-making processes by which it establishes its collection strategies;

-- The number of transactions per servicing employee;

-- Its cash management methods; and

-- Its ability to report to investors and relevant parties.

Standard & Poor's bases its servicer evaluations on an objective and comprehensive assessment of a servicer's operational capabilities for servicing various types of receivables and obligatory rights. Based on the assessment, we assign rankings in the following five categories: STRONG, ABOVE AVERAGE, AVERAGE, BELOW AVERAGE, and WEAK.

To be included in, or to remain on, Standard & Poor's Select Servicer List, servicers must, in principle, meet the criteria for attaining at least an AVERAGE ranking with a stable outlook.

RELATED CRITERIA AND RESEARCH

"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

RANKING AFFIRMED

MU Frontier Servicer Co. Ltd.

Role Ranking

Residential loan special servicer STRONG/Stable

RANKINGS WITHDRAWN

MU Frontier Servicer Co. Ltd.

Role Ranking

Commercial loan special servicer STRONG/Stable

Consumer finance special servicer STRONG/Stable

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