Special Servicers for the Cordusio Series, F-E Mortgages Series as well as Capital Mortgages, BIPCA Cordusio and Heliconus transactions
London, 28 May 2010 -- Moody's Investors Service said today that it considers Unicredit's
special servicing platform to be of high quality. Early delinquent
loans are managed by Customer Recovery (CuRe), a division of UniCredit
Spa while UniCredit Credit Management Bank (UCMB) services doubtful and
As part of Moody's surveillance process of residential mortgage-backed
securities (RMBS) transactions, it regularly meets with servicers
to monitor their quality and discuss changes to the servicing infrastructure
since Moody's previous visit. Moody's met with CuRe
and UCMB in the spring of 2010.
UniCredit Banca Spa and UniCredit Family Financing Bank Spa have sub-delegated
the special servicing activities to CuRe and UCMB for the following Moody's-rated
outstanding Italian RMBS transactions:
-- Cordusio RMBS - UCFin S.r.l. -
Series 2006 and Series 2009
-- Cordusio RMBS S.r.l.
-- Cordusio RMBS Securitisation S.r.l -- Series
2006, Series 2007 and Series 2008
-- F-E Mortgages S.r.l.
-- F-E Mortgages S.r.l. 2005
-- BIPCA Cordusio RMBS
-- Capital Mortgage Series 2007-1
-- Heliconus S.r.l.
As of March 2010, the total outstanding balance of these 11 transactions
was EUR33.3 billion.
MOODY'S UPDATED OPINION ON CuRe'S SPECIAL SERVICING OPERATION.
Moody's observes that the recovery performance in the early stage
of delinquency for the securitised mortgage loans appears to be slightly
better than that for UniCredit's on-balance sheet mortgage
loans between October 2009 and February 2010.
Moody's views positively the fact that CuRe starts contacting the
borrower shortly after a payment is missed (i.e. after five
days) and the extended working hours of its call centre, which are
longer than most of its Italian peers (i.e. normal working
hours). The former allows CuRe to rapidly understand the reason
for non-payment and assess if it is a short-term or long-term
issue, while the latter increases the likelihood of reaching a borrower.
CuRe's call centre services delinquent mortgages, unsecured
and personal loans, which to some extent explains its apparently
high ratio of loans per collector. In addition, Moody's
concern is somewhat mitigated by CuRe's strategy to leverage external
collection agencies to manage temporary peaks in the number of delinquent
accounts, with the exception of mortgage loans, which are
always serviced in-house. Furthermore, Moody's
was informed that CuRe has been operating within its call centre operational
targets, which are in line with industry best practices.
CuRe's recruitment, induction and training programmes and
the low level of staff per team leader to some degree mitigate the relatively
low level of experience in collection which is below Moody's standard.
In addition, Moody's notes that collectors have prior work
experience in banking.
Moody's notes favourably the strong governance and control infrastructure
in place within the department.
CuRe benefits from an integrated servicing system, which provides
a consolidated view of a borrower's situation across UniCredit's
subsidiaries and also records all the activities taking place on the account.
This information is also accessible by the branch network.
MOODY'S UPDATED OPINION ON UCMB'S SPECIAL SERVICING OPERATION
Moody's considers positively the 4% increase in cash collected
and the 17% increase in recovery rate as a percentage of gross
book value (GBV) for closed loans in 2009 in comparison to 2008.
Moody's notes that the recovery rate for residential mortgage reduced
by 5% to 80% in 2009 in comparison to 2008. Nevertheless,
the rating agency believes that this performance are good as these were
achieved in a more difficult economic environment.
Moody's observes favourably that UCMB extended its branch network
during 2009 to be closer to the borrower and its external network of field
agents with a view to facilitating the communication flow with its external
parties and to strengthen its control.
Over the past few years, UCMB has reduced its panel of solicitors
and selected the best performers to enhance its control, streamline
the administration tasks and promote best practices.
In 2009, UCMB implemented a detailed business plan at mortgage loan
level, which Moody's views positively as it strengthens the
monitoring of recovery process against individual business plan (timeline
and recovery rate).
Moody's further views positively the enhancements to UCMB's
risk framework and governance and the automatic checks within its servicing
IT system, as this can mitigate servicing interruptions, regulatory
breaches and operational losses. Moody's considers that this
infrastructure will provide greater servicer stability over time.
Moody's believes that UCMB benefits from one of the most integrated
IT servicing system with its third parties in comparison with its EMEA
peers in the RMBS segment.
SECURITISED PORTFOLIO PERFORMANCE
As of March 2010, the 90+ delinquent rate (excluding defaulted
loans) as a percentage of the current pool balance for the UniCredit index
(which includes the 11 transactions listed above) was 1.62%,
which was slightly below the Italian RMBS index (1.79%)
while the 90+ delinquent rate (including defaulted loans) as a percentage
of the original pool balance was 2.45% which was 10%
below the Italian RMBS index (2.78%).
Across the 11 transactions, some transactions are performing better
than the Italian indices, while others are performing worse.
In Moody's opinion, the difference in performance across these
transactions are mainly due to different origination practices (e.g.
policies and channels) of the originators within Unicredit group.
CuRe'S SPECIAL SERVICING INFRASTRUCTURE - OVERVIEW
CuRe is the internal centralised department that performs the credit management
activities for delinquent retail and SME loans for Unicredit's subsidiaries.
The soft collection department services loans that are more than five
and less than 90 days delinquent. This department employs 447 staff
across two locations and operates as a call centre.
The soft collection department benefits from dialler technology.
CuRe has implemented targeted call campaigns strategy based, among
other things, on a risk segmentation of its portfolio (i.e.
prioritisation model). If contact cannot be established after 90
days or the borrower is not cooperative, the hard collection department
takes over the servicing of the loan. During this process,
face-to-face contact at the borrower's house will
take place. CuRe outsources this activity to door-to-door
collection agencies. CuRe's hard collection team is responsible
for monitoring the collection agency panel and assisting the agencies
in their work.
Loans which are classified as "Incagli" or "Sofferenza" are transferred
UCMB'S SPECIAL SERVICING INFRASTRUCTURE - OVERVIEW
UCMB was established in 2000. As of December 2009, it serviced
a portfolio of 983,818 non-performing loans with a combined
GBV of EUR33.6 billion. UCMB provides its services to subsidiaries
of the Unicredit group and to non-captive clients. The book
under management includes consumer, residential and commercial loans
as well as leasing.
UCMB has increased its number of staff during 2009 to 706 located in 23
branches across Italy. As of December 2009, 70% of
its staff were lawyers and the staff had an average age of 41 years.
Incentives for UCMB's staff include a yearly bonus based on individual
and company key performance indicators.
UCMB leverages a network of external consultants (approximately 1,500),
of door-to-door companies (100) and solicitors (1,055,
of which 304 are now preferred solicitors) to assist it in its activities.
These preferred solicitors receives new cases. UCMB benefits from
a strong infrastructure to monitor the performances of the third parties.
UCMB leverages an internet portal to advertise the sale of credit lines
and auction dates to increase the number of potential buyers which could
potentially increase the recovery value.
UCMB has been certified as ISO 9001 quality management since 2008.
Moody's publishes a weekly summary of structured finance credit,
ratings and methodologies, available to all registered users of
our website, at www.moodys.com/SFQuickCheck.
For further information, please visit our website directly or contact
Moody's Client Service Desk (+44 20) 7772 5454. Additional
information on the referenced Moody's rated RMBS transactions,
including the latest Performance Overview, is available at www.moodys.com.
Structured Finance Group
Moody's France S.A.
JOURNALISTS: 44 20 7772 5456
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Moody's updates on Unicredit Holding Spa and Unicredit Credit Management Bank as special servicers of 11 Italian RMBS deals
Asst Vice President - Analyst
Structured Finance Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
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