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October 6, 2009
(Excerpt from STANDARD & POOR'S RATINGS DIRECT®)
SN Servicing Corp. Residential Subprime, Special Servicer Rankings
Raised To ABOVE AVERAGE; Outlook Is Stable
OVERVIEW
- We raised our rankings on SN Servicing Corp., a sole proprietorship, to ABOVE AVERAGE
from AVERAGE for residential mortgage special servicing and residential mortgage
subprime servicing.
- The upgrades reflect the company's ability to successfully implement a new business
plan, enhancements to its training environment, improved auditing controls, and
resolution of prior IT audit issues.
- The stable outlook reflects the company's improved control environment and additional
future business opportunities that will continue to stabilize the portfolio and
ideally, increase it in the near future. Standard & Poor's Ratings Services today
raised its rankings on SN Servicing Corp. (SNSC), a sole proprietorship, to ABOVE
AVERAGE from AVERAGE as a residential mortgage subprime servicer and residential
mortgage special servicer. At the same time, we revised our outlook on the servicer
to stable from developing.
The rankings reflect numerous enhancements the company has made to its operation
since Standard & Poor's last review. SNSC continues to successfully implement a
new business plan involving third-party servicing, which provides the company with
additional growth opportunities. This new strategy was enacted with the primary
assistance of three recently hired senior managers who have been able to source
business from various clients in the residential and asset-backed marketplace.
The company has also augmented and redesigned its training programs so that instruction
is more intuitive, comprehensive, applies more instructional mediums, and is easier
to understand, which is important given the current and planned increase in staff.
SNSC also increased the training hours for key customer service and collection personnel,
and provided additional supervisory instruction. Policies and procedures remain
satisfactory and the company enhanced them where applicable to reflect specifics
regarding third-party servicing.
The company's internal auditing function is now fully independent of loan servicing
and reports to an auditing committee. In order to further strengthen controls, the
department is currently implementing a quality control audit of non-HUD loans and
has undertaken SAS 70 readiness review testing in preparation for a full exam in
the future. SNSC has made certain enhancements to its IT environment over the last
year that have increased efficiencies. Concurrently, the servicer has made improvements
in the overall technology infrastructure and has rectified certain audit issues
that we noted previously. The company continues to maintain experienced management
and staff, and has been able to recruit employees with some financial experience.
SNSC continues to maintain fine call center metrics as reflected in data provided
by the company through Standard & Poor's SEAM (Servicer Evaluation Analytical Methodology)
questionnaire. Management has developed an interface that facilitates electronic
boarding of adjustable-rate mortgage and escrow data, an improvement from the prior
inefficient manual input process. Additionally, the company now analyzes and completes
workouts using a fully electronic net present value analysis. Previously, this process
was only partially automated. The company's efforts to obtain quarterly credit scores
and establish a dedicated skip-tracing department should assist with delinquency
management. The company also maintains an eight-person field staff to assist with
workout processes. Having satisfied our minimum criteria for inclusion, we will
add SNSC to our Select Servicer List in the residential subprime and residential
special servicer categories.
Outlook
Our outlook on SNSC is stable. SNSC continues to develop additional third-party
relationships affecting both residential and consumer assets. The company has also
placed more focus over the past several months on the control environment to ensure
satisfactory servicing performance. The company's dual auditing mechanisms, in combination
with future SAS 70 readiness exams, should result in a more solid control environment
as the portfolio continues to grow. Standard & Poor's believes SNSC will remain
a competent subprime and special servicer in the residential mortgage marketplace.
RELATED ARTICLES
- Golobay, Diana. "SN Servicing Gets Rating Boost on New Business Plan" www.housingwire.com,
HousingWire
Web. 6 October 2009.
RELATED RESEARCH
- "Servicer Evaluation Ranking Criteria: U.S.," published Sept. 21, 2004.
- "Revised Criteria For Including RMBS, CMBS, And ABS Servicers On Standard & Poor's
Select Servicer List," published April 16, 2009.
- "Select Servicer List."
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