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 entity. -- 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. KEY RANKING FACTORS Strengths: -- 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 thorough. Weaknesses: -- 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. Outlook 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. RELATED CRITERIA AND RESEARCH -- 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.