TEXT - S&P affirms Bank of America Merrill Lynch commercial servicer rankings

Mon Dec 17, 2012 3:58pm EST

OVERVIEW

     -- We affirmed our overall STRONG ranking on BofA Merrill Lynch Global 
Markets Commercial Real Estate Servicing as a commercial loan primary and 
master servicer. The outlook is stable.
     -- We affirmed our overall ABOVE AVERAGE ranking on BofA Merrill Lynch 
Global Markets Commercial Real Estate Servicing as a commercial loan special 
servicer. The outlook is stable.
     -- We based our opinion on the company's well defined, efficient 
operations and procedures, highly effective leverage of loan servicing systems 
and strong audit, compliance and quality control environment.
 
NEW YORK (Standard & Poor's) Dec. 17, 2012--Standard & Poor's Ratings Services 
today affirmed its STRONG ranking on BofA Merrill Lynch Global Markets 
Commercial Real Estate Servicing (CRES) as a commercial loan primary and 
master servicer. We also affirmed our ABOVE AVERAGE ranking as commercial loan 
special servicer. The outlook is stable for all three rankings. The financial 
position is Sufficient.

BofA Merrill Lynch is one of the world's largest financial services companies 
with clients in more than 150 countries and provides services ranging from 
investment and corporate banking to investing and equity execution services. 
The bank is a major originator and servicer of commercial and multifamily 
mortgages, including large-loan, single-borrower, and CMBS transactions, which 
include fixed-rate conduit lending. As of June 30, 2012, CRES had total assets 
under management of approximately $110 billion and employed approximately 90 
professionals. Its primary, master and special servicing operations are 
headquartered in Charlotte, N.C.

The affirmed rankings reflect, in our opinion, the company's ongoing 
commitment to operational enhancements, proactive portfolio surveillance, 
experienced management team, and effective systems and technology. The company 
continues to improve processes and procedures in all areas of the 
organization, which, in our view, resulted in greater operating efficiencies.
 
KEY RANKING FACTORS

Strengths:
     -- Well defined, efficient operations and procedures;
     -- Highly effective leverage of loan servicing systems; and
     -- Strong audit, compliance, and quality control environment;

Weakness:
     -- No formal vendor performance review process for appraiser, property 
managers and brokers.
 
As of June 30, 2012, the company primary serviced a portfolio of approximately 
9,497 loans and 13,084 collateral properties constituting a total unpaid 
principal balance of approximately $99.7 billion. The portfolio is 
geographically dispersed and contains all major collateral property types. 
CRES services loans for a diverse mix of investor types including CMBS, 
investment funds, life insurance company mortgages, financial institutions and 
Fannie Mae. Loan volume has decreased modestly over the past four and a half 
years mainly as due to lower CMBS issuance.

As of the same date, CRES was the master servicer for more than18 third-party 
subservicers and the portfolio totaled $10.5 billion with 1,436 loans. New 
master servicing volume has decreased in recent years; however, CRES maintains 
the resources and procedures to accommodate new transactions.

Also as of June 30, 2012, the company managed a special servicing portfolio of 
416 properties totaling $4 billion as well as three real estate owned (REO) 
assets totaling $4.5 million. CRES is the named special servicer on 13 CMBS 
transactions with 64 loans totaling $13.7 billion. Overall the special 
servicing portfolio is predominately comprised of CMBS assets with a smaller 
portion of loans managed for banks and other third-party investors. The 
portfolio includes complex loan structures and most collateral property types 
located throughout the country. Since 2003, the group has resolved 
approximately $28 billion in problem loans. 

OUTLOOK

Our outlook on all three servicer rankings is stable. CRES has a successful 
track record servicing commercial and multifamily mortgage loans. The company 
has demonstrated its commitment to invest in technology resources and 
continuous process improvement.