While Wells Fargo is fighting to earn back its customers’ trust and fighting off various forays from legislators because of the more than 2 million fake accounts that 5,000 of the bank’s former employees opened in order to get sales bonuses, the bank’s ability as a mortgage servicer is still on solid footing, according to a new repot from Fitch Ratings.
The report from Fitch, released this week, shows that the credit ratings agency affirmed Wells Fargo Home Mortgage’s ratings as a mortgage servicer in three categories: prime, Alt-A, and subprime.
According to Fitch’s report, the agency affirmed Wells Fargo’s residential primary servicer rating for prime product, residential primary servicer rating for Alt-A product, and residential primary servicer rating for subprime product at “RPS1-”.
The outlook for each of those three ratings is stable, Fitch said.
Fitch’s ratings system rates residential mortgage primary, master, and special servicers on a scale of 1 to 5, with 1 being the highest rating. Fitch also further differentiates ratings within some of those rating levels by plus (+) and minus (-) as well as the flat rating.
Therefore, Wells Fargo’s servicer ratings are just below the highest possible ratings in Fitch’s system.
The quality of Wells Fargo’s ratings is significant considering the bank’s market share as a servicer.
According to Fitch’s report, Wells Fargo is the “largest U.S. residential mortgage servicer,” with a portfolio of approximately 8.6 million loans totaling $1.52 trillion in unpaid principal balance.
That portfolio includes approximately 7.3 million agency loans, totaling $1.1 trillion; approximately 916,000 owned in portfolio, totaling $278 billion; approximately 341,000 non-agency RMBS loans, totaling $65 billion; and approximately 119,000 third-party serviced loans, totaling $19.7 billion.
According to Fitch’s report, Wells Fargo has seven primary servicing/customer centers and nine dedicated sites that provide home preservation assistance to borrowers.
Fitch’s report states that Wells Fargo does not offshore any customer-facing functions and indicates that it has no immediate intention to pursue this objective.
According to Fitch’s repot, the affirmed servicer ratings reflect the Wells Fargo’s “organizational restructuring, expanded automated functionalities, its conservative growth objectives and experienced leadership team.”
Fitch also said that Wells Fargo continues to invest in training and strengthened its internal control processes to provide increased oversight of its business line operations during the relevant review period.
“Wells Fargo continues its testing processes in accordance to the national servicing standards and maintains servicing procedures and controls in accordance to the respective state, private investor, and agency requirements,” Fitch said in its report.
Additionally, Fitch stated that Wells Fargo’s servicing site consolidation efforts contributed to the affirmation of its ratings.
According to Fitch, Wells Fargo also completed several organizational changes to “reflect the improving delinquency portfolio and the reduction in mortgagor outreach programs.”
Fitch added that Wells Fargo stated that it is now concentrating its efforts on working with “smaller community groups and focusing efforts to address home preservation issues.”