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Related Issuers
Rating Action - Servicer:

Moody's upgrades Bayview's residential SQ rating; commercial SQ rating unchanged

Global Credit Research - 02 Apr 2012

U.S. Residential Mortgage Servicer Rating Actions

New York, April 02, 2012 -- Moody's Investors Service has upgraded Bayview Loan Servicing, LLC's ("Bayview") servicer quality (SQ) rating as a Special Servicer of residential mortgage loans to SQ2 from SQ2-, and affirmed the company's Special Servicer of small balance commercial loans servicer quality rating of SQ2-. The ratings are based on above average collection abilities and loss mitigation results, and a below average servicing stability assessment. The foreclosure and REO timeline management assessment for the commercial rating is above average, while the foreclosure and REO timeline assessment for the residential rating was increased to strong from above average.

RATINGS RATIONALE

The upgrade in the company's rating as a Special Servicer of residential mortgage loans is due to the increase in the REO and timeline management assessment which was based on the company's solid timeline performance relative to its peers.

Moody's views Bayview's collection results and loss mitigation abilities to be above average. Since the prior review, the company implemented the MSP servicing platform and has transitioned approximately a third of its residential mortgage loans to the new platform. The new servicing platform improves operational efficiencies and facilitates growth of the residential servicing portfolio. The remaining residential mortgage loans and the entire portfolio of small-balance commercial loans continue to be serviced on the Servicing Director servicing platform.

Moody's considers Bayview's foreclosure and REO timeline management to be above average for commercial loans and strong for residential loans. Since the prior review, the company terminated its relationship with the vendor performing its foreclosure processing, and has brought that function inhouse. Bayview also replaced its proprietary software for managing REO with a web-based system, enabling asset managers to handle a larger portfolio of properties.

Bayview is the special servicing subsidiary of Bayview Asset Management, LLC, a fund management business involved in mortgage acquisition and securitization. The stability assessment incorporates Bayview's history of consistent profitability, which is balanced by the company's private ownership structure which adds uncertainty to the stability of the servicing platform.

As of March 31, 2012, Bayview's servicing portfolio consisted of 35,490 residential mortgage loans and 11,028 small balance commercial loans (excluding REO) for a total unpaid principal balance of approximately $11.2 billion.

Bayview performs its servicing operations out of Miami, Florida; Hurst, Texas; Ft. Washington, Pennsylvania; and Pompano Beach, Florida. Since the prior review, the company has launched servicing operations in San Juan, Puerto Rico and Chicago, Illinois.

The previous rating action for Bayview's rating as a Special Servicer of residential mortgage loans occurred on April 14, 2011. At that time, Moody's confirmed Bayview's rating at SQ2-. The previous rating action for Bayview's rating as a Special Servicer of small balance commercial loans occurred on September 14, 2010, at which time we affirmed the rating at SQ2-.

Moody's SQ ratings represent its view of a servicer's ability to prevent or mitigate asset pool losses across changing markets. The rating scale ranges from SQ1 (strong) to SQ5 (weak). Where appropriate, a "+" or "-" modifier will be appended to the relevant rating to indicate a servicer's relative servicing quality within a particular category. Moody's servicer ratings are differentiated in the marketplace by focusing on performance management. SQ ratings for U.S. residential mortgage servicers incorporate assessments of delinquency transition rates, foreclosure timeline management, loan cure rates, recoveries, loan resolution outcomes, and REO management -- all critical indicators of a servicer's ability to maximize returns from mortgage portfolios.

Moody's servicer ratings also consider the company's ability to maintain its focus on high quality servicing in an economic downturn. Servicing operations can be stressed by increasing the number of delinquent loans while at the same time increasing the need for liquidity. The SQ rating reflects our expectation of the impact that the servicing will have on the on-going credit performance of the portfolio. For this reason, Moody's monitors SQ ratings based on periodic information provided by servicers and conducts a formal re-evaluation of its servicer ratings annually.

The methodology used in this rating was "Moody's Approach to Rating Residential Mortgage Servicers" published in January 2001. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

Other factors used in this rating are described in "Updated Moody's Servicer Quality Rating Scale and Definitions" published in May 2005.

REGULATORY DISCLOSURES

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see the ratings disclosure page on www.moodys.com for general disclosure on potential conflicts of interests.

Please see the ratings disclosure page on www.moodys.com for information on (A) MCO's major shareholders (above 5%) and for (B) further information regarding certain affiliations that may exist between directors of MCO and rated entities as well as (C) the names of entities that hold ratings from MIS that have also publicly reported to the SEC an ownership interest in MCO of more than 5%. A member of the board of directors of this rated entity may also be a member of the board of directors of a shareholder of Moody's Corporation; however, Moody's has not independently verified this matter.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history.

The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Gene Berman
Asst Vice President - Analyst
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

William Fricke
VP - Senior Credit Officer
Structured Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's upgrades Bayview's residential SQ rating; commercial SQ rating unchanged
No Related Data.

 

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