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SP New Reports Compare Residential Servicer Performance

As pressures in the U.S. residential mortgage market continue leading to increased delinquencies, loan administrators are quickly becoming critical protectors against foreclosures and losses. While market participants and investors of structured securities are hoping mortgage servicers can deftly navigate the current credit environment and remedy problem loan scenarios, the tasks at hand are not without their challenges.

Given the current focus on loan administration amid the current financial conditions, Standard & Poor's Ratings Services has introduced its Servicer Evaluation Benchmark Report product, which allows residential loan administrators to compare their loan servicing performance with the capabilities of comparable peers. The reports also provide investors and institutions with impartial, third-party perspective on the relative performance of the servicers ranked by Standard & Poor's.

"For example, companies that are contemplating adding new specialties can use these reports to assess the potential to expand into those areas," said servicer analyst Richard Koch, a director in Standard & Poor's Servicer Evaluations group. "In cases like these, we will analyze and evaluate the metrics of servicers that already offer those services. This will shed light on how a certain area of focus is currently being handled in the market, and will help us benchmark firms that decide to branch off into new areas."

Standard & Poor's (http://www.sandp.com) uses metrics it gathers semiannually from its proprietary Servicer Evaluation Analytical Methodology (SEAM) database to compare the performance of similar servicers, which provide companies with independent qualitative insight into their strengths and possible deficiencies. Standard & Poor's current portfolio of ranked residential servicers includes approximately 80 firms spanning the following operation types: prime, subprime, subordinate lien, and special. Standard & Poor's SEAM database (http://www.benchmarkreport.standardandpoors.com) includes over 2,000 easily navigable fields that cover more than 12 loan administration categories, including collections, loss mitigation, foreclosure, bankruptcy, real estate owned (REO), and portfolio stratification.

Some of the key metrics that SEAM captures include:

     -- Loan delinquencies segregated into 30-day categories ranging from 30- to 120-days delinquent;

     -- Percent of loan modification workouts;

     -- Forbearance cure rate (represents successful forbearance efforts);

     -- Forbearance break rate (represents unsuccessful forbearance efforts);

     -- Foreclosure cure rate (represents loans in foreclosure that are brought back to performing status);

     -- Average speed of answer within the collections department;

     -- Abandonment rate within the collections department;

     -- Foreclosure timeline compliance;

     -- REO inventory turn rate (represents the rate that REO inventory is sold); and

     -- Overall loss severity.

Each Servicer Benchmark report, which is customized for each firm, measures a company's capabilities across an array of areas against a group of comparable, anonymous peers. Peers are selected according to portfolio size, the types of loans administered, and geographical coverage, among other criteria.

For additional information about the Servicer Evaluation Benchmark Report product, please contact either client services at (212) 438-7280 (option 2), or sales at (212) 438-4738. Alternatively, send an email to servicer_evaluations @ standardandpoors.com or visit the Servicer Evaluation Benchmark Report product page online at www.benchmarkreport.standardandpoors.com.

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