Moody's puts BofA mortgage servicer ratings on review for downgrade
Moody's Investors Service put the primary and special servicer ratings of Bank of America (BAC) on review for possible downgrade after the nation's largest bank suspended foreclosure cases in 23 states to amend faulty affidavits. Analysts said possible delays in foreclosures and longer real-estate owned timelines, as well as legal challenges to completed foreclosures and reputational risk for the banks' servicing operations led to the review. The deterioration of the company's collections, loss-mitigation, and timeline-performance metrics also prompted Moody's to initiate the review. Other factors that prompted the ratings agency's action include the relatively low level of modifications and high modification re-default rates on loans in Bank of America serviced residential mortgage-backed securities. Bank of America's servicing portfolio, which is by far and away the largest in the nation, totals nearly 13.8 million loans with an outstanding principal balance of about $2.14 trillion. In addition to focusing on the increased timelines, effectiveness of any new procedures, deterioration in collections and loss mitigation, Moody's plans to review Bank of America's quality-control processes and oversight of the foreclosure document execution department. Last week, Moody's announced a similar review of JPMorgan's mortgage servicing operations. Moody's rates servicers on a scale of SQ1 to SQ5 with the lowest number reflecting the strongest rating. Both Bank of America's primary and special servicer rating are currently rated SQ1. Write to Jason Philyaw.