Fitch Ratings has affirmed Bank of America, N.A.'s (BANA) U.S. residential servicer ratings:
--Residential primary servicer rating for Prime product affirmed at 'RPS1-';
--Residential primary servicer rating for Alt-A product affirmed at 'RPS1-';
--Residential primary servicer rating for HELOC product affirmed at 'RPS1-'.
The rating actions are based on BANA's experienced management team, robust internal control environment and advanced, integrated technology. The rating actions also incorporate the financial strength of BANA. Fitch rates BANA's long-term Issuer Default Rating (IDR) 'A+'; Outlook Stable. The IDR for BANA is dependent on support from the U.S. government. 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'.
In July 2008, BANA's ultimate parent, Bank of America Corporation (BAC), acquired Countrywide Financial Corporation and its subsidiaries (collectively, Countrywide) and began the process of integrating the two mortgage operations. In November 2008, Countrywide transferred substantially all of its remaining mortgage servicing operations to Countrywide Home Loans Servicing, LP (CHLS). In April 2009, CHLS' name was changed to BAC Home Loans Servicing, LP (BACHLS). The combined BANA and BACHLS servicing portfolio totaled over $2 trillion and 13.8 million loans as of Aug. 31, 2009 making it the largest servicer of residential mortgage loans in the U.S.
The integration of BANA's servicing operations with BACHLS allows the company to add experienced management, leverage vertically integrated captive service providers, and enhance its servicing technology. Subsequent to Fitch's review, BANA converted over 3.3 million accounts to the BACHLS servicing system and implemented new default applications including a workout model that incorporates business rules and calculations for decisioning modification requests. The integrated servicing operation will utilize BACHLS's outsourcing strategies, including resources in India and Costa Rica to handle a portion of collections calls for loans up to 60 days delinquent that may be included in nonagency residential mortgage-backed securities (RMBS) transactions. Previously, all collection activity for BANA's servicing portfolio was handled in the U.S.
Fitch's review of BANA's 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 BANA's ability to maintain its servicing performance while continuing to integrate its operations with BACHLS in a high delinquency environment.
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'.
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Mary
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