Fitch Affirms Chase's U.S. RMBS Servicer Ratings

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed the U.S. RMBS servicer ratings for JPMorgan Chase Bank, NA (Chase) as follows:

--Residential primary servicer rating for Prime product at 'RPS2+'; Outlook Stable;

--Residential primary servicer rating for Alt-A product at 'RPS2+'; Outlook Stable;

--Residential primary servicer rating for Subprime product at 'RPS2+'; Outlook Stable;

--Residential primary servicer rating for HELOC product at 'RPS2+'; Outlook Stable;

--Residential primary specialty servicer rating for Second Lien product at 'RPS2+'; Outlook Stable;

--Residential primary specialty servicer rating for Option ARM product at 'RPS2+'; Outlook Stable;

--Residential special servicer at 'RSS2+'; Outlook Stable;

--Residential master servicer at 'RMS2'; Outlook Stable.

The primary and special servicer rating actions reflect Chase's continued progress on regulatory settlements, operational improvements, and internal audit results. The master servicer rating reflects the company's established master servicing operation and also incorporates Fitch's observations regarding portfolio runoff. All of the ratings incorporate the company's continued investments in technology, consistent Reg AB and USAP results, and its financial condition. Chase is rated 'AA-' with a Stable Outlook by Fitch. A company's financial condition is a component of Fitch's servicer rating analysis.

Fitch views positively the progress Chase continues to make on regulatory settlements it has entered into over the past several years, including the National Mortgage Settlement (NMS), the OCC consent order, and the residential mortgage backed securities (RMBS) settlement. However, Chase did enter into a new settlement with the DOJ's U.S. Trustee Program in March 2015 which negatively affected the primary and special servicer ratings.

Chase continues to improve its primary and special servicing operational capabilities as it streamlines its servicing sites. Since the prior review, the company consolidated to five main servicing sites in the U.S including its headquarters in Columbus OH, and a captive site in Manila, the Philippines. The company exited servicing sites in Melbourne FL, Albion NY, Rochester NY, and Irving, TX, as well as a vendor site in Panama. As of Sept. 30, 2015, Chase's primary and special servicing portfolio comprised more than 6.2 million loans totaling $930.7 billion.

Operational improvements during the current review period included the standardization of call center roles across the Consumer and Community Banking division (CCB), the business segment that contains the residential mortgage servicing operations, and the expanded use of multi-function specialists to provide staffing flexibility across CCB. The company also implemented a number of bankruptcy process enhancements.

Technology updates during the current review period included projects to improve Regulation X compliance controls; enhancements to provide better workflow, tracking, and monitoring for bankruptcy functions, and an on-going project to consolidate all HELOC loans onto MSP, the core system used for servicing the non-HELOC residential mortgage loans which make up the majority of the servicing portfolio.

Internal audit reports reviewed by Fitch for the current review period were consistent with those in the prior review, with the number of significant findings remaining relatively low. In addition, in Chase's most recent Reg AB report for the primary and special servicing operation, the number of instances of material non-compliance remained at one. The most recent USAP report did not contain any instances of non-compliance.

Chase's master servicing activities are overseen by its subsidiary Washington Mutual Mortgage Securities Corp. (WMMSC). WMMSC has been operating for more than 37 years, including several predecessor entities that Chase acquired from Washington Mutual Bank (WaMu) and EMC Mortgage. The most recent Reg AB and USAP reports for the master servicing operation did not contain any instances of material non-compliance, which is consistent with the prior review period.

Chase's master servicing portfolio continues to decrease, with no loans expected to be added to the platform to offset runoff. As of Sept. 30, 2015, the master servicing portfolio decreased by 13.7% to 24,800 loans totaling $7.8 billion from 28,700 loans totaling $9.1 billion. Although Chase continues to support the master servicing operation through technology investments, which included upgrades to the SBO2000 system and enhancements to its investor portal, Fitch will continue to monitor the master servicing operation and expects further operational enhancements that incorporate industry changes.

Fitch believes that Chase continues to maintain capable primary, special, and master servicing operations with the staff, procedures, controls, default management processes, and technology to manage its current servicing portfolio.

Fitch rates residential mortgage primary, master, and special servicers on a scale of 1 to 5, with 1 being the highest rating. Within some of these rating levels, Fitch further differentiates ratings by plus (+) and minus (-) as well as the flat rating. For more information on Fitch's residential servicer rating program, please see Fitch's report 'Rating U.S. Residential and Small Balance Commercial Mortgage Servicer Rating Criteria', dated April 23, 2015 which is available on the Fitch Ratings web site at 'www.fitchratings.com'.

Additional information is available at www.fitchratings.com

Additional Disclosures

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https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=997068

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View source version on businesswire.com: http://www.businesswire.com/news/home/20151218005822/en/

Fitch Ratings
Primary Analyst
Thomas Crowe
Senior Director
+1-212-908-0227
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Natasha Aikins
Director
+1-212-908-0272
or
Committee Chairperson
Roelof Slump
Managing Director
+1-212-908-0705
or
Media Relations:
Sandro Scenga, +1 212-908-0278
[email protected]

Source: Fitch Ratings

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