Servicing Key for Construction Loans, Fitch Says

Servicing has a major effect on the performance of a commercial real estate construction loan, according to Fitch Ratings in a new report outlining its criteria for rating construction loan servicers.Fitch said its analysis of construction loan servicers will focus on five main functions: loan closing; servicing; construction risk management and underwriting; disbursement processing and control; and subperforming loan management. "Companies that have been servicing construction loans for at least five years and have demonstrated expertise in managing a diverse portfolio of construction loans are viewed favorably," said Fitch director Rich Carlson. "By the same token, however, Fitch also expects highly rated servicers to maintain awareness of current servicing trends by participating in industry conferences, forums, and associations that actively shape industry standards." Fitch rates construction loan servicers as Acceptable or Unacceptable, and Mr. Carlson said the rating agency will only consider rating securitizations of such loans if the servicer is rated Acceptable. Fitch can be found online at http://www.fitchratings.com.