Fitch Ratings, a credit rating agency released its affirmation of U.S. servicer ratings for Nationstar Mortgage LLC, (Nationstar), d/b/a Mr. Cooper, an indirect subsidiary of Mr. Cooper Group Inc., (Mr. Cooper).
The rating, according to Fitch is stable. The affirmed ratings of Mr. Cooper is reflective of the company’s focus on operational enhancements, customer experience as well as experienced senior management, Fitch said in a statement. Given that a company’s financial status is a component of Fitch’s servicer rating analysis, the ratings agency’s financial institutions reviewed Mr. Cooper’s financial statements for internal assessment. However, the release stated, “Fitch does not publicly rate the credit and financial strength of Mr. Cooper.”
The ratings were based on:
—U.S. residential primary servicer rating for subprime product at 'RPS2-'
—U.S. residential primary servicer rating for special servicing at 'RSS2-'
—U.S. residential primary servicer rating for alt-a product at'RPS2-'
—U.S. residential primary servicer rating for master servicing at 'RSM2+'
Mr. Cooper completed a merger with WMIH Corp.(Washington Mutual, Inc.) on July 31, 2018, acquiring ownership from Fortress Investment Group, followed by an acquisition of the loan origination and servicing business of Pacific Union Financial with a scheduled closing in first-quarter 2019, bringing in $25 billion of loan servicing and an average annual loan origination production of over $10 billion, consisting of correspondent and warehouse channels.
The affirmed ratings also elucidate on the company's 'Project Titan' initiative to better align loan originations and servicing process flows and reduce cost. The company’s three lines of risk management framework across the loan servicing enterprise comprise continuous risk control self-assessment, governance and oversight functions, and internal audit. Internal audit results were satisfactory overall; however, Fitch analysts noted a continued opportunity for improvement in certain areas, which was taken into account in the rating assessment.
There were no instances of material noncompliance identified in the Reg AB report for the year ended December 31, 2017. Mr. Cooper’s customer service calls are routinely monitored for quality and compliance and the company engages a third party to conduct extensive customer feedback surveys to measure borrower satisfaction scores. Mr. Cooper’s call center performance metrics compare favorably with their industry peers, the ratings indicated. As of September 30, 2018, Nationstar serviced approximately 2.9 million loans with an unpaid principal balance (UPB) of $478 billion and was master servicer on 275,000 loans with an unpaid principal balance of $49.1 billion.