Cenlar FSB Ranking as a Residential Mortgage Primary Servicer Affirmed at STRONG; Outlook Stable
Cenlar FSB Ranking as a Residential Mortgage Primary Servicer Affirmed at STRONG; Outlook Stable
October 18, 2016 NEW YORK (Standard & Poor’s) –S&P Global Ratings today affirmed its STRONG ranking on Cenlar FSB (Cenlar) as a residential mortgage primary (prime) servicer. The Outlook is Stable.
MAJOR RANKING FACTORS
• Successful growth of Cenlar’s subservicing portfolio in a competitive environment without encountering any substantive operational difficulties.
• Good experience levels for senior and middle managers in addition to competitive overall turnover levels.
• A fine training program.
• An enterprise risk management organization that applies multiple levels of internal controls to identify, assess and remediate organizational risk.
• No material Regulation AB, Uniform Single Audit Program, internal audit, or Statement on Standards for Attestation Engagements 16 findings.
• A well-designed technology environment.
• An exemplary number of calls monitored in customer service.
• Quantitative metrics that compare favorably with its peer group.
• Sound default management processes.
• No unified enterprise governance, risk, and compliance system.
• No web portal for customers to upload workout-related documents.
KEY CHANGES SINCE STANDARD & POOR’S LAST REVIEW
• Cenlar opened another servicing site in Tempe, Ariz.
• It began establishing a quality assurance function as another first line of defense.
• The company’s servicing reporting area developed various new reports and other enhancements that have resulted in better tracking and productivity.
• It introduced some additional boarding validations to reduce inconsistencies and errors.
• It revised the insurance letters to make them more consumer-centric.
• Cenlar implemented workforce management software to better forecast staffing volumes during high customer contact timeframes.
OPINION
Standard & Poor’s Ratings Services ranking on Cenlar FSB is STRONG as a residential mortgage primary loan servicer. Our rankings reflect the company’s fine experience levels, generally good servicing metrics, solid and multiple levels of internal controls, and proven ability to increase its subservicing business. Our outlook on the ranking is stable.
Cenlar continues to reflect generally good performance metrics per data collected via S&P Global Ratings’ proprietary Servicer Evaluation Analytical Methodology (SEAM) questionnaire. The company also continues to increase its servicing portfolio while concurrently investing in its infrastructure to ensure it has the appropriate staffing, controls, and technology in place to service a larger number of accounts.
Cenlar’s various auditing mechanisms include departmental, quality control, compliance, internal audit, and a separate vendor exam. Further revisions are in the process of being implemented in some of these areas to further refine and strengthen processes. The company has good oversight over vendor and complaint management functions and is well-experienced in both boarding and transferring loans from its portfolio given its history as a private label subservicer. Call center metrics are competitive with its peers’, and its default management practices seek to provide borrowers with alternatives to legal actions when the account becomes delinquent.
OUTLOOK
The outlook is stable. Cenlar has numerous improvements planned over the next 12 months that we believe will improve its operational effectiveness by affecting its systems and internal control environment. It continues to evidence generally fine servicing metrics, as well as a thorough internal control environment that is in the process of undergoing some further enhancements to strengthen the organization’s risk culture. We believe Cenlar will remain an effective residential loan servicer in the mortgage industry.
RELATED CRITERIA AND RESEARCH
Related Criteria
• Revised Criteria For Including RMBS, CMBS, And ABS Servicers On Standard & Poor’s Select Servicer List, April 16, 2009
• Servicer Evaluation Ranking Criteria: U.S., Sept. 21, 2004
Related Research
• Select Servicer List, Aug. 10, 2016
• Servicer Evaluation: Cenlar FSB, July 13, 2015
Source: Standard & Poor’s, Service Analyst: Steven L. Frie, New York (1) 212-438-2458; Steven.frie@spglobal.com; Secondary Contact: Mark J Shannon, New York (1) 770-680-5185; mark.shannon@spglobal.com; Analytical Manager, North America Servicer Evaluations: Robert J Radziul, New York (1) 212-438-1051; Robert.radziul@spglobal.com