April 19, 2012 / 6:15 PM / 5 years ago

TEXT-Fitch puts some GMAC-serviced RMBS on watch negative

3 Min Read

April 19 - Fitch Ratings has placed 157 RMBS classes serviced by GMAC
Mortgage on Rating Watch Negative. GMAC Mortgage (GMAC) is a subsidiary of
Residential Capital LLC (ResCap). The rating actions follow Fitch's downgrade of
ResCap's Issuer Default Rating to 'C' from 'CCC' on April 18. GMAC's servicer
ratings were placed on Rating Watch Negative earlier today. 	
The RMBS actions reflect increased uncertainty for the servicing portfolio due 	
to the growing possibility of a bankruptcy or debt restructuring for ResCap. 	
Although a servicing disruption is still not expected in the most-likely 	
scenario, Fitch believes the rising risk of a disruption should be considered in	
stressed rating scenarios.	
A spreadsheet listing the transactions reviewed can be found at 	
'www.fitchratings.com' by performing a title search for 'Fitch Places Various 	
GMAC-Serviced RMBS on Rating Watch Negative'.	
Close to 80% of the approximately 2,700 RMBS classes rated by Fitch and serviced	
by GMAC currently have a non-investment grade or distressed long-term rating. Of	
those classes currently with investment-grade ratings, 90% are in the Prime and 	
Alt-A sectors and were issued primarily prior to 2005. 	
While Prime and Alt-A transactions currently face a low likelihood of a 	
servicing disruption, Fitch felt the risk should be reflected in high investment	
grade stress scenarios for mortgage pools with a material amount of delinquency.	
Pools with higher delinquency may be less attractive to potential buyers of 	
GMAC's servicing rights. Consequently, Fitch placed 'AAAsf' and 'AAsf' rated 	
Prime and Alt-A classes on Rating Watch if more than 10% of the mortgage pool is	
currently delinquent and GMAC services over 30% of the mortgage pool.	
Fitch believes the risk of a servicing disruption is greatest for Subprime 	
mortgage pools, which likely have fewer potential servicers willing and able to 	
acquire the servicing rights from GMAC. To reflect this risk, Fitch placed on 	
Rating Watch all investment grade classes in Subprime transactions in which GMAC	
serviced over 30% of the mortgage pool.	
In the coming months, Fitch will monitor ResCap's ability and willingness to 	
meet its financial obligations and the implications for GMAC's servicing 	
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

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