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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
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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.
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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.
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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
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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.
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"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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