Fitch assigned a residential primary servicer and residential special servicer rating for BSI Financial Services as RPS3- and RSS3-, respectively. According to Fitch, these rating means the “servicer is demonstrating proficiency in overall servicing ability.”
The rating’s actions are based on BSI’s residential mortgage servicing experience and adequate servicing technology, Fitch stated. However, the outlook ratings also reflect BSI’s limited experience in servicing loans in RMBS transactions and the company’s developing internal control environment.
Additionally, the New York-based agency said the ratings 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, mandated by regulators and other parties.
Characteristics of a level three servicer may include demonstrating expertise in servicing diverse product groups, effective internal controls, establishment of comprehensive policies and procedures, a master servicer that has experience and controls in place for monitoring primary servicers and other sub-servicers, a special servicer that demonstrates adequate workout and disposition experience, proven proficiency in staffing and training, and adequate financial resources for its portfolio size.
BSI provides third-party servicing of highly distressed mortgage loans on behalf of private investors, banks, credit unions, and mortgage bankers. The company employs approximately 200 full-time workers.
Through the end of May, BSI was servicing over 17,000 residential mortgage loans totaling $2.9 billion. This includes about 79% first lien mortgages comprising of over 5,500 government-sponsored entities product and over 8,200 nonagency mortgage loans. Also, 21% of the portfolio accounts for second lien mortgages which are primarily closed end loans.
While Fitch believes BSI Financial has a capable servicing platform with the capacity and infrastructure for its current servicing portfolio, the ratings agency believes the Dallas-based servicer will need to strengthen certain areas of the platform as it positions itself for servicing nonagency RMBS rated transactions.