RPT-Fitch Upgrades CMIS Dutch Residential Special and Master Servicing Ratings

Tue Mar 18, 2014 6:36am EDT

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March 18 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has upgraded Credit Management and Investor Solutions B.V.'s (CMIS, specifically Adaxio, the servicing entity) Dutch Residential Mortgage Special and Master Servicer Ratings to 'RSS2' and 'RMS2' from 'RSS2-' and 'RMS2-' respectively. At the same time, Fitch has assigned it a Dutch Residential Mortgage Primary Servicer Rating of 'RPS2-'.

Over the last 18 months, CMIS has acquired Welke Beheer B.V, providing it, among other things, with improved call centre capabilities and enabling it to offer origination services. CMIS has also acquired De HypotheekShop, giving it access to additional distribution channels. CMIS now covers the full end-to end mortgage value chain.

In October 2012, the majority of primary servicing activities, for some portfolios were brought in-house to CMIS from the previous servicer. The assignment of the primary servicer rating is reflective of CMIS now offering a full suite of primary servicing capabilities. However, as the company has been completing some of these tasks for less than 18 months, its primary servicing experience lags behind some Dutch peers.

The upgrades reflect enhancements to CMIS's mature risk management framework over the last 12 months, with the additions to the risk assurance platform providing improved regular risk and control reporting. The framework consists of a combined compliance, risk management and internal audit function. It is further supported by external audits, such as the extended scope of an ISAE Type II report. However, the framework is yet to be fully rolled out to the newly acquired entities.

CMIS's servicing technology platform remains strong, with a data warehouse providing state-of-the-art technology and sound reporting. Enhancements have been made that are deemed to be particularly beneficial to the master servicing function. Furthermore, recent developments include multi-channel customer contact technology comprising a dialler to support campaign management.

CMIS continues to address a difficult market environment in the Netherlands with innovative servicing strategies, such as portfolio segmentation and a real estate management team that Fitch considers as market-leading among its rated peers. This is demonstrated by stable arrears performance and a high percentage of private sales compared with peers. Furthermore, CMIS is one of few to have developed an arrears prevention methodology, which is still fairly new to the Dutch RMBS market.

CMIS continues to provide high-quality training, as demonstrated by staff rotations across functions, an increased emphasis on soft skills and client focus. This is supported by the hiring of an additional internal trainer. Fitch considers this particularly important for CMIS's extended call centre activities and the integration of staff from acquired entities and servicing rights.

Fitch used its global servicer rating criteria to analyse the servicer's operations and financial condition, including a comparison against similar Dutch servicers as part of the review process. The analysis is based on information provided to Fitch by CMIS and other Dutch servicers.

At 30 June 2013 CMIS's Dutch special servicing portfolio totalled EUR6.2bn and comprised 35,477 loans, an increase of 3% by value and number of loans, from end-June 2012. RMBS represents 97% of the total by value. CMIS is primary servicer of 71% of this portfolio by value. In addition, CMIS acts as master servicer for 21 RMBS transactions of Dutch mortgages totalling EUR6.5bn (2012: 16 transactions, EUR6bn), and four German-originated RMBS transactions, three client pools, and a back-up (master) servicing arrangement for a subprime RMBS transaction.

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