Fitch Affirms BAC Home Loans Servicing’s RMBS Servicer Ratings

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed the following U.S. residential mortgage servicer ratings for BAC Home Loans Servicing, LP (BACHLS):

--Residential primary servicer rating for Prime product at 'RPS1-';

--Residential primary servicer rating for Alt-A product at 'RPS2+';

--Residential primary servicer rating for Subprime product at 'RPS2+';

--Residential primary servicer rating for HELOC product at 'RPS2+';

--Residential primary specialty servicer rating for Second Lien product at 'RPS2+';

--Residential special servicer rating at 'RSS2+'.

The rating actions are based on BACHLS' experienced management team, robust servicing technology, effective vertical integration strategy and risk management practices. The rating actions also incorporate the financial strength of BACHLS' parent Bank of America, N.A. (BANA). Fitch rates BANA's long-term Issuer Default Rating (IDR) 'A+'; Rating Watch Negative. Currently, the long-term IDR of 'A+' considers BANA's importance to the global financial system and high degree of U.S. government support during the financial crisis. Going forward, support is less certain given the recent FDIC proposal governing the resolution of systemically important financial institutions. In addition, the ratings were determined in accordance with Fitch's criteria 'Rating U.S. Residential Mortgage Servicers' and 'Global Rating Criteria for Structured Finance Servicers'.

As of July 31, 2010, BACHLS' servicing portfolio was comprised of over 11.8 million loans totaling $1.9 trillion. This includes approximately 504,000 loans totaling $75.9 billion which are being subserviced for BANA. In October 2010, BACHLS completed the conversion of over 101,000 accounts from Home Loan Services, Inc. (HLS) to its servicing system as it integrates the portfolio and operations of HLS' servicing platform. BANA's parent, Bank of America Corporation had acquired HLS' parent, Merrill Lynch, in January 2009. BACHLS' servicing operations continue to leverage vertically integrated captive service providers and outsourcing strategies, including resources in India and Costa Rica that handle a portion of collections calls for loans up to 90 days delinquent that are included in non-agency residential mortgage-backed securities (RMBS) transactions.

Fitch's review of BACHLS' servicing operations confirmed that the company has a capable servicing platform with the capacity, systems, and staff necessary to support its servicing portfolio. However, Fitch will continue to monitor BACHLS' ability to maintain its servicing performance while pursuing its initiatives in this high delinquency environment.

On Nov. 4, 2010, Fitch assigned a Negative Outlook for the entire U.S. Residential Mortgage Servicer ratings sector on increased concerns surrounding alleged procedural defects in the judicial foreclosure process. Responses to Fitch's recent survey of its rated servicers regarding internal procedures used to verify and execute foreclosure affidavits indicate that all servicers are taking this matter seriously and are continuing to work to resolve any issues uncovered. Fitch may place an individual servicer's ratings on Rating Watch Negative and/or downgrade the ratings if the servicer does not make a diligent and timely review of its processes and take immediate corrective action to remediate any foreclosure action or documentation failures. Fitch may take similar actions on a servicer's ratings if the impact of the additional costs that must be borne by the servicer significantly affects its financial condition. Until those conclusions are reached, the Negative Outlook on the sector impacts all U.S. RMBS servicers.

Fitch rates residential mortgage primary, master, and special servicers on a scale of 1 to 5, with 1 being the highest rating. Within some of these rating levels, Fitch further differentiates ratings by plus (+) and minus (-) as well as the flat rating. For more information on Fitch's residential servicer rating program, please see Fitch's report 'Rating U.S. Residential Mortgage Servicers', dated Nov. 29, 2006 and 'Global Rating Criteria for Structured Finance Servicers' dated Sept. 30, 2009, which are available on the Fitch Ratings web site at 'www.fitchratings.com'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria & Related Research:

--'Rating U.S. Residential Mortgage Servicers', dated Nov. 29, 2006;

--'Global Rating Criteria for Structured Finance Servicers' dated Aug. 16, 2010.

Applicable Criteria and Related Research:

Rating U.S. Residential Mortgage Servicers

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=302964

Global Rating Criteria for Structured Finance Servicers

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547305

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Fitch Ratings
Primary AnalystThomas Crowe, +1-212-908-0227
Fitch, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary AnalystMichael Laidlaw, +1-212-908-0251
Director
or
Committee ChairpersonDiane Pendley, +1-212-908-0777
Managing Director
or
Media Relations:Brian Bertsch, +1-212-908-0549 (New York)
[email protected]

Source: Fitch Ratings