Rating Agency Downgrades Accredited

Fitch Ratings has downgraded its rating on Accredited Home Lenders as a residential primary servicer of subprime loans to "RPS3-" from a previous rating of "RPS3+" citing the challenging environment in subprime lending today and uncertainty regarding Accredited's ability to maintain adequate funding to be viable in the market. Fitch noted last month that Accredited has taken steps to ease its short-term liquidity pressure.

For instance, the company reached an agreement to sell, at a discount, $2.7 billion of loans in its held-for-sale portfolio. The company also received a commitment for a $200 million term loan from Farallon Capital Management. The fine print on that proposed term loan had not been definitively approved when MSN went to press.

Moreover, Accredited had not yet filed its annual 10-K with the SEC, because the firm had not finished evaluating impairment of the goodwill related to its acquisition of Aames Investment Corp., once a stalwart of the nonprime lending industry.

Fitch officials said that an onsite operational review showed that Accredited's servicing site "continues to perform at a level consistent with the prior year." Since its year-earlier review, Accredited has enhanced call center technology and improved proactive management of early payment defaults, Fitch said. The rating agency noted that Accredited has also expanded its offshore outsourcing to include early stage collections and inbound customer service calls.

Fitch also said its servicer rating reflects the challenges the company may face in funding its ongoing servicing operations and maintaining loan servicing quality as the parent company seeks strategic alternatives during difficult times in the subprime business.

Accredited services loans from sites in San Diego and Orlando, Fla. The company's portfolio consisted of 48,748 loans with an unpaid principal balance of more than $9.6 billion as of the end of January.

(c) 2007 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com

Next in News ►