Fitch Affirms Merrill Servicing Unit in Wake of BofA Acquisition

One of the acquisitions that headed over to Bank of America Corp. (BAC) with its opportunistic purchase of Merrill Lynch & Co. (MER) last week was little-noticed Home Loan Services, Merrill’s subprime servicing unit and one-time First Franklin mortgage servicer. Fitch last week said that HLS’ ratings would remain at the their current levels, but moved the servicer to “evolving” on its rating watch — the move comes as the future of HLS remains up in the air. Bank of America has already acquired a substantial servicing platform in Countrywide Financial, and some sources have suggested to HW in recent weeks that HLS will merely be absorbed into Countrywide’s larger servicing machinery. Fitch said in a press statement that its decision to move HLS to evolving reflected “uncertainty of market conditions and the sale of HLS’ parent, Merrill Lynch.” Headquartered in Pittsburgh with a call center located in nearby Upper St. Clair, HLS services subprime, Alt-A, and second lien loans. As of June 30, HLS serviced 292,667 loans with an unpaid principal balance of more than $43 billion, down from 338,529 loans with a UPB of $49.4 billion at year end 2007, due in part to the shutdown of the First Franklin origination platform in March 2008. The portfolio consists of $7.2 million Alt-A and $36.1 billion subprime product, Fitch’s analysts said. For more information, visit Disclosure: The author held no relevant positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

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