May 22, 2012 / 7:21 PM / 7 years ago

TEXT-S&P affirms Celink residential reverse mortgage servicer ranking

May 22 - OVERVIEW	
     -- We affirmed our ABOVE AVERAGE ranking on Celink as a residential 	
reverse mortgage servicer.	
     -- We raised the subranking to STRONG from ABOVE AVERAGE for loan 	
administration due to several improvements made within the organization. 	
     -- The company has grown its portfolio at a moderate pace and is 	
expecting a large portfolio of loans later in 2012, for which the company will 	
perform nondefault functions as part of an agreement with another servicing 	
     -- Celink, we believe, continues to show good experience levels.	
     May 22 - Standard & Poor's Ratings Services today affirmed its ABOVE
AVERAGE ranking on Celink as a residential reverse mortgage servicer. The
outlook is stable.	
     -- The company leveraged its long history of servicing residential 	
mortgages and second liens when the company changed its focus to residential 	
reverse mortgage servicing. 	
     -- We believe Celink has well-defined policies and procedures and a 	
satisfactory auditing program in place. 	
     -- The company changed its tax vendor to improve communications with its 	
borrower base. 	
     -- Management established a single point of contact for borrowers 	
experiencing a tax and/or insurance default so customers may contact one 	
individual to discuss a possible resolution. 	
     -- We consider the company's monitoring program for telephone staff to be 	
     -- The training program  is good and improving, in our view, but we 	
believe it could be broadened; and	
     -- The quality control program addresses all areas of servicing, but 	
there is no independent internal audit due to the size of the operation. 	
Founded in 1969, Celink is a privately owned company that entered the reverse 	
mortgage industry in 2005. Before it began focusing on reverse mortgage loan 	
servicing, the company was a servicer of traditional mortgage loans (beginning 	
in 1979) for state housing finance agencies, HUD Title I loans, and a few 	
mortgages with high loan-to-value (LTV) ratios.	
We affirmed our ABOVE AVERAGE subranking for management and organization and 	
raised the subranking for loan administration to STRONG from ABOVE AVERAGE. We 	
consider Celink's financial position to be Sufficient.	
Based on our analysis, the company has successfully executed its business plan 	
by gradually increasing the portfolio over the past few years. As an example, 	
management recently entered a unique agreement with another servicing entity 	
that will ultimately result in Celink performing nondefault servicing 	
functions for approximately 100,000 reverse mortgage loans. The company also 	
continues to increase its portfolio through other client relationships at a 	
moderate rate which allows them, in our view, to properly prepare and 	
structure the organization for future growth. In contrast to past business 	
strategy, management is now solely focused on its reverse mortgage product and 	
they have transferred existing experienced staff from the prior forward 	
mortgage area into the reverse mortgage department, thus leveraging their 	
overall expertise, despite differences between the products. 	
We believe Celink continues to exhibit good senior management experience 	
levels, as most of these individuals have significant knowledge of the reverse 	
mortgage industry. Celink enhanced its training by introducing single point of 	
contact for those borrowers with tax/insurance defaults. The internal quality 	
control program continues to provide oversight of all servicing areas and the 	
company added some additional layers to its review of the most frequently used 	
vendors to help ensure those vendors adhere to control and performance 	
standards. The company invested in enhancements for the technology environment 	
over the past year and management indicated this will continue in 2012. These 	
enhancements include electronic workflow queues, which, in our opinion, 	
resulted in better productivity for the staff and improved reporting of 	
results to management.   	
Within the past year, management changed its tax vendor to another provider 	
that we believe affords them more proactive contact with borrowers who are 	
experiencing a property tax arrearage. The company's call center metrics, when 	
compared with other servicers we follow, reflect good results. Management 	
indicated that it experienced no issues with foreclosure affidavits and has 	
multiple levels of review to help ensure the accuracy of the data and that 	
they were properly executed. 	
The outlook is stable. In our opinion, Celink has shown its ability to both 	
grow the portfolio and maintain adequate controls over the organization. 	
Additional investments in its technology environment should, we believe, 	
result in other improvements over the next year that will further enhance 	
management oversight and ease certain manual processes. Management has already 	
projected its staffing needs due to the forthcoming portfolio transfer and 	
does not expect any difficulties in hiring more staff. As the company 	
continues to grow, we expect them to further develop the training program and 	
continually strengthen its auditing programs to support the company's 	
servicing function. We believe Celink will remain a proficient residential 	
reverse mortgage servicer. 	
     -- Bulletin: No Servicer Ranking Actions Will Follow $25 Billion AG 	
Settlement, published Feb. 15, 2012.	
     -- Revised Criteria For Including RMBS, CMBS, And ABS Servicers On 	
Standard & Poor's Select Servicer List, published April 16, 2009. 	
     -- Servicer Evaluation Ranking Criteria: U.S., published Sept. 21, 2004. 	
     -- Select Servicer List.
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