The typical processes of many servicers of residential mortgage-backed securities do not apply to reverse mortgages or must be "dramatically adjusted" to successfully service this growing niche product, according to a new Fitch Ratings report.Servicers need a "distinct ... operational focus" to adequately administer reverse mortgages (which enable senior citizens to convert home equity into tax-free income) because the products may increase risk to their operations, according to Fitch senior director Karen Eissner. "A servicer's ability to track loan balances and disbursements to borrowers, as well as monitor taxes and insurance, are vital for properly servicing reverse mortgages," Ms. Eissner said. Also desirable are specialized training on the complexities of reverse mortgages and the use of "strict timeline management" in managing loss severities, Fitch said. The report, "Servicing U.S. Residential Reverse Mortgages," is available online at http://www.fitchratings.com.

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