Fitch: Litigation Creates Concern at ORIX
Fitch Ratings has placed the commercial mortgage special servicer rating of ORIX Capital Markets on Rating Watch Negative status, saying the company's aggressive use of litigation may not suit the interests of investors in commercial mortgage-backed securities.
Fitch said ORIX's special servicing strategies are more consistent with a rating of "CSS2" or even "CSS3" than with its current "CSS1" rating.
"ORIX often pursues resolution of perceived errors or loopholes in loan or deal documents by initiating aggressive litigation," said Stephanie Petosa, senior director at Fitch. "This strategy presents a higher risk to the financial interests of the certificate holders."
Fitch's servicer ratings take into account not only operational competency, but methods and strategies that servicers employ when conducting their business. While Fitch views ORIX as an "overall capable special servicer," the litigation strategies present high financial risks to investors, Fitch said.
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