Late Friday, Fitch said it had upgraded the servicer rating for Central Mortgage Company, a loan servicing subsidiary of Arvest Bank Group. Prime servicer ratings were bumped to ‘RPS2-‘ and Fitch also assigned an ‘RPS3’ to the company’s new Alt-A servicing line. A couple items really stuck out at me in the press release, however:

• As part of the upgrade, Fitch noted the company has developed an attorney scorecard for default management
• The company does not service Arvest Loans, but engages in servicing-by-acquisition

First, you should know Fitch doesn’t disclose the entire ratings report in a press release — if you’ve never seen one, a full rating report is anywhere from 10-20 pages and covers all sort of metrics. I bring this up because it means that the items chosen for the press release are the most prominent in any ratings action — and Fitch mentioned CMC’s attorney scorecard as a factor in the upgrade. The press release don’t specify, but it sounds like CMC didn’t have a scorecard system in place in the past. Wow – that’s like a television manufacturer just discovering that plasma screens exist. Second, the company looks to be filling a niche for flow servicing — flow servicing is best thought of as the temporary servicing of a loan between funding and sale. And Fitch says in its press release that this market has been booming due to industry consolidation. Anyone else a little surprised by this? I would have expected flow servicing to decrease as investors ratchet down purchase volume, but apparently not (!). Are the EPDs and associated loan transfers really that big of a niche servicing opportunity?