S&P Cuts Minimum Servicing Fees

Standard & Poor's Ratings Services has lowered the minimum servicing fees required on mortgage-backed security deals containing prime residential mortgage loans.S&P said the revised minimum fees are based on surveys of mortgage loan servicers, servicing cost data provided by its Servicer Evaluations group, and changes in servicing costs relative to loan-size balances. The new minimum fees are: 17.5 basis points for prime jumbo fixed-rate loans; 20.0 bps for prime jumbo adjustable-rate mortgages; 22.5 bps for prime conforming balance fixed-rate loans; and 25.0 bps for prime conforming balance ARMs. S&P said it establishes such requirements "to attract quality servicers should the servicing function need to be transferred." The average loan servicing cost has declined as a result of technological advances, electronic commerce initiatives, outsourcing, and enhanced workflow automation, the rating agency said. In addition, industry consolidation has allowed the remaining participants to spread their fixed-cost base over a larger pool of loans. S&P can be found online at http://www.standardandpoors.com.