Fitch Eyes Option One Servicer Ratings

The residential primary servicer rating for subprime product and the residential special servicer rating of Option One Mortgage Corp. have been placed on Rating Watch Negative by Fitch Ratings.The company's primary servicer rating is RPS1, and its special servicer rating is RSS1. (Fitch rates residential servicers on a scale of 1 to 5, with 1 being the highest rating.) Fitch said the actions reflect "the potential impact on Option One's servicing platform of decreased loan originations, changes in credit lines, as well as uncertainties regarding the sale of the servicing platform." The rating agency noted that H&R Block announced in April that Option One's servicing platform would be purchased by Cerberus Capital Management LP. "In light of challenges facing the subprime market, including the increased cost of servicing defaulted subprime loans, as well as Option One's transitioning from a publicly rated parent to an unrated nonpublic company, there are concerns regarding the company's ability to sustain its operational capabilities," Fitch said.