GMAC Issues New Servicing Advance Facility Notes

GMAC Mortgage Servicer Advance Funding Co. Ltd. has issued a new series of notes rated by DBRS. A review for possible downgrade on an earlier series by Moody's Investors Service based on operational issues GMAC has been working on correcting is still pending. Responding to GMAC's request for an opinion on whether the new series would have an effect on the older series' ratings, Moody's said the new issuance and related amendments alone wouldn't hurt them. However, it would not opine on "whether the new issuance or amendments could have other, credit-related effects." The amendments remove pooling and servicing agreements that include Fannie Mae/Freddie Mac collateral from the transactions eligible for funding by the servicing advance facility and establish cash flow allocations between the earlier notes and the later notes aimed at ensuring credit support for the former is not diluted by the latter. In addition, the amendments increase the size of the reserve fund, enhance third party verification of the facility's operations and revise discount rates that set the limit of the amount of notes that can be issued for each type of advance receivable. Moody's previously put the earlier servicing advance facility series on review due to a concern involving the netting of cash flows. It subsequently said GMAC had corrected this by setting up "segregated trust-specific custodial accounts," something it had planned to monitor through March. A similar netting issue that prompted a review of GMAC residential mortgage-backed securities ratings for possible downgrade got underway later and was slated to take longer.