Fitch Ratings said late last week that is had affirmed numerous servicer ratings for HSBC Mortgage Corp., the U.S. mortgage servicing arm of HSBC Bank USA, NA. HSBC saw its residential primary servicer ratings for prime, Alt-A and HE/HELOC affirmed at 'RPS2+,' while the rating agency assigned a rating of 'RPS2-' for subprime servicing. From the press statement, it appears that HSBC is consolidating servicing operations across its rather substantial portfolio:
HMC has operations in HSBC's group service centers (GSC) in Bangalore, India and Manila, Philippines. The GSC sites perform a portion of new loan setup and data validation, account reconciliations, payment and payoff processing, suspense processing, insurance processing, inbound customer service calls account maintenance, ARM audits and processing, discharge research and processing, inbound and outbound collections calls for prime loans, and foreclosure and bankruptcy setup and monitoring. As of June 30, 2007, HMC serviced more than 454,000 loans totaling $68.4 billion. HMC's portfolio includes approximately $44.9 billion prime loans, $9.3 billion Alt-A loans, and $2.2 billion HE/HELOC loans, and $3.2 billion subprime loans. Since Fitch's prior review, HMC expanded its use of HSBC's GSC sites to include Manila, Philippines, implemented an automated loss mitigation system, began interim servicing and handling repurchases for affiliate subprime originator Decision One, and acquired servicing rights for several pools owned by HSBC Securities, transferring loans in from other servicers.
It's also interesting to note that HSBC wasn't utilizing automated loss mitigation prior to the current review -- which leads me to wonder how the servicer maintained its ratings in the past. Such platforms have been the cost of doing business for nearly 10 years, and it's surprising to see Fitch suggest that HSBC hadn't implemented such a system until very recently. For more information, visit