Fitch Assigns Residential Mortgage Servicer Rating to RoundPoint Mortgage Servicing Corporation

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings takes the following rating actions on RoundPoint Mortgage Corporation's (RoundPoint) U.S. residential mortgage servicer ratings:

--U.S. Residential primary servicer rating for Subprime product assigned at 'RPS3';

--U.S. Residential Special Servicer rating assigned at 'RSS3'.

The rating actions are based on RoundPoint's ability to establish a reliable servicing platform since its inception in 2007. The ratings reflect RoundPoint's capable default performance; focused, 'high touch' servicing approach; and advanced servicing technology. However, the ratings also reflect RoundPoint's limited operating history, especially with respect to servicing loans in RMBS transactions, and developing internal control environment. In addition, the ratings reflect the financial condition of RoundPoint, a non-publicly rated entity, as financial condition is an important component of Fitch's servicer ratings. The ratings also reflect Fitch's overall concerns for the U.S. residential servicing industry which include the ability to maintain high performance standards while addressing the rising cost of servicing and changes to industry practices, which are likely to be mandated by regulators and other parties.

RoundPoint, a wholly owned subsidiary of RoundPoint Financial Group, Inc., a part of the Tavistock Group of companies, was founded in 2007 to provide asset management and 'high touch' servicing for investors of distressed residential mortgage assets. A sister company, RoundPoint Mortgage Company, is a national residential lender.

RoundPoint is headquartered in Charlotte NC, with an additional servicing site in Henderson NV. As of Jan. 31, 2011, RoundPoint serviced over 22,200 loans with a UPB of $2.95 billion. Subprime product made up approximately 23% of the portfolio by loan volume, and special servicing accounted for 42% of the portfolio by loan volume. RoundPoint's client base consists of commercial banks, credit unions, hedge funds, and the Federal Deposit Insurance Corporation (FDIC).

RoundPoint's loss mitigation department is organized around investor-specific teams comprised of a portfolio manager and portfolio specialists. The loss mitigation specialists are responsible for all assigned loans that are 90 or more days delinquent or that have been referred to the loss mitigation department until a resolution is reached. RoundPoint developed a loss mitigation tool that incorporates investor specific net present value calculations and allows loan level data access by investors through the company's investor web portal. This proprietary system tracks loss mitigation recommendations and investor approvals.

Fitch recently completed its operational review of RoundPoint's servicing operations and believes the company has established a reliable servicing platform with the capacity and infrastructure to maintain and increase its residential servicing operations. However, Fitch will continue to monitor the company's financial condition and its impact on the company's performance and operational capabilities, while pursuing its growth initiatives in a high delinquency environment.

In November 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 diligently and timely review 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 affects 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 and Small Balance Commercial Mortgage Servicer Rating Criteria', dated Jan. 31, 2011 which is available on the Fitch Ratings website at 'www.fitchratings.com'.

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

Applicable Criteria and Related Research:

'Global Rating Criteria for Structured Finance Servicers' (Aug. 13, 2010);

'U.S. Residential and Small Balance Commercial Mortgage Servicer Rating' (Jan. 31, 2011) .

Applicable Criteria and Related Research:

U.S. Residential and Small Balance Commercial Mortgage Servicer Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=600065

Global Rating Criteria for Structured Finance Servicers

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

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Fitch RatingsThomas Crowe, +1-212-908-0227
Senior Director
Fitch, Inc.
One State Street Plaza
New York, NY 10004
orDiane Pendley, +1-212-908-0777
Managing Director
or
Media Relations:Sandro Scenga, +1-212-908-0278
Email: [email protected]

Source: Fitch Ratings