Fitch Monitoring Green Tree's U.S. Resi Svcr Ratings Following Bank of America Announcement
Fitch Ratings is monitoring Green Tree Servicing LLC's (Green Tree) servicer ratings following the announcement by Bank of America (BOA) on Jan. 7, 2013 that it plans to sell mortgage servicing rights (MSRs) on approximately 650,000 residential mortgage loans totaling $93 billion to Green Tree's parent, Walter Investment Management Corp. (Walter). Loan transfers are expected to occur in multiple stages and to be completed by the end of the third quarter 2013. Given the scale of the announced BOA transaction as well as the on-going integration of GMAC Mortgage LLC (GMAC Mortgage) servicing assets at Green Tree, Fitch is in active dialogue with the company to assess how the acquisition of MSRs from BOA will be managed from both a timing and resources standpoint.
At this time, Fitch does not believe the BOA transaction will impact existing servicer ratings for Green Tree as existing ratings already reflect Green Tree's capacity planning including staffing needs. However, Fitch will closely monitor the loan transfers and subsequent performance to determine any impact on Green Tree's servicer ratings. A significant deterioration in operational capability or portfolio performance at the company could result in a servicer rating downgrade or rating watch.
Fitch currently rates Green Tree 'RPS2' for primary servicer of prime, subprime, HLTV, HELOC, and second lien product, and 'RSS2+' for special servicer, all with a Stable Rating Outlook. In October 2012, the United States Bankruptcy Court, Southern District of New York, announced that Walter won a joint bid with Ocwen Loan Servicing LLC for the GMAC Mortgage servicing platform. GMAC Mortgage is a wholly owned subsidiary of Residential Capital LLC. The sale, which was approved by the Bankruptcy Court in November 2012, is expected to close by March 2013, will transfer approximately 365,000 of GMAC Mortgage's FNMA portfolio to Green Tree.
Walter recently announced it has entered into a definitive agreement to acquire the mortgage servicing platform of MetLife Bank, N.A. located in Irving, TX. The platform acquisition will provide Green Tree with significant scalable capacity.
As of Sept. 30, 2012, Green Tree's servicing portfolio consisted of 970,393 loans with an unpaid principal balance (UPB) of approximately $78.6 billion. The portfolio is composed of 37% MH product, 24% closed end second product, 30% agency product (including prime), 7% subprime product, and 2% HELOC/HLTV. Completion of the GMAC Mortgage transfer is expected to increase Green Tree's residential servicing portfolio by approximately 40.5%. The MSR acquisition from BOA is expected to increase Green Tree's servicing portfolio by an additional 59.8%.
Additional information is available at 'www.fitchratings.com'.
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