March 8 (The following statement was released by the rating agency)
Fitch Ratings has affirmed Acenden Limited's
residential mortgage servicer ratings as follows:
UK Primary (Prime) Servicer Rating affirmed at 'RPS2+'
UK Primary (Sub-prime) Servicer Rating affirmed at 'RPS2+'
UK Special Servicer Rating affirmed at 'RSS2'
The servicer ratings reflect Acenden's continued strong internal audit and risk
management framework. This is considered to be market leading among servicing
peers and provides Acenden with a strong governance structure and high levels of
The primary and special servicing ratings take into consideration the changes in
the senior management team over the past 12-18 months. At the time of writing,
the departed Chief Operating Officer (who left in September 2012), Commercial
Director (who left in March 2012) and IT Director (who left in June 2012) have
not been directly replaced. A Business Origination and Development Director,
with a wider mandate than the former role of Commercial Director, joined Acenden
in August 2012. Acenden has advised Fitch that a new COO will start shortly,
whilst a new Chief Information Officer is due to start in April 2013.
The special servicer rating reflects Acenden's proactive approach to the
effective management of impaired loans and choosing the correct form of
rehabilitation available to the borrower via the development of its BestStrategy
tool. By developing this tool, Fitch believes that Acenden has demonstrated an
understanding of the need for a tool that acts in the best interests of both the
borrower and the client when providing a loan rehabilitation option.
In the 12 months to 30 June 2012, average training hours for operational staff
members stood at 17.9 hours - this is significantly lower than the Fitch
benchmark of 40 hours per annum and rated peers. Newly hired operational staff
averaged a low 27.9 hours. Fitch would view positively an increased emphasis on
training in these areas. However, Acenden has focused its attention on training
for the management team. This has led to an increase in average training hours
to 52.3 hours for this team.
When Acenden made the required regulatory changes to how mortgage administration
fees (other amounts owed) were dealt with back in 2010, it did not update its
reporting for securitisations to reflect these changes. This led to the relative
arrears performance appearing worse than was actually the case. To clarify the
situation, Acenden has now added additional delinquency performance data to its
investor reports which show the arrears position from the borrower's
perspective, consistent with the FSA's published cash allocation prioritisation.
Fitch believes that the most recent data available shows the changes. This has
brought the performance of Acenden's loans more in line with other similar
non-conforming transactions, whilst the additional reporting itself is now on
the same basis as other servicers/issuers.
As of 30 June 2012, Acenden's servicing portfolio totalled GBP5.88bn and
comprised 69,039 loans. This has declined from GBP6.27bn in December 2010,
although an additional portfolio of second charge mortgages from a new client
was boarded in February 2013. Fitch considers it important that Acenden arrests
the reduction in assets under management. The agency also believes it is
important for Acenden to demonstrate its ability to successfully service more
Fitch employed its global and UK servicer rating criteria in analysing the
servicer's operations and financial condition, with the former criteria
including a comparison of similar UK servicers as part of the review process.