Fitch Upgrades Freddie Mac's Commercial Mortgage Special Servicer Ratings

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings takes the following actions on the commercial mortgage servicer ratings of Freddie Mac's Multifamily Division:

--Commercial mortgage special servicer rating upgraded to 'CSS2' from 'CSS2-';

--Commercial mortgage master servicer rating affirmed at 'CMS2'.

The upgrade of the special servicer rating reflects the special servicing group's workout experience with multifamily properties throughout the United States, proactive surveillance, efficient use of technology for asset management, and effective internal controls. While only two members of the special servicing team, who average over 30 years of experience, are actively working out defaulted assets, the group has significant special servicing bench strength and management depth among its 19 employees who are capable of working out loans should defaults rise. Special servicing senior managers average 29 years of experience and 12 years of tenure, while middle managers average 22 years of experience and seven years with the company.

The special servicing group is responsible for defaults within Freddie Mac's balance sheet portfolio which consists of 6,373 loans totaling $70.3 billion as of March 31, 2015, as well as one CMBS transaction. The group resolved seven defaulted loans for the 12 months ending March 2015 totaling $42.4 million, only one of which incurred a loss. Resolutions included three full payoffs, three returned to performing, and one discounted payoff for multifamily assets located in five states and the outstanding balance of the loans ranged from approximately $280,000 to $9.1 million.

The affirmation of the master servicer rating reflects Fitch's assessment of Freddie Mac's core servicing competencies, including primary servicer oversight, surveillance, loan accounting, and investor reporting. Since becoming a rated master servicer, Freddie Mac has appointed itself for the FREMF 2014-KX01, and most recently, FREMF 2015-KJ01 transactions. Future master servicing assignments are expected to support new product initiatives such as small balance and affordable housing transactions as well as balance sheet transactions of legacy assets. In addition to the two CMBS transactions, Freddie Mac performs the core master servicing, in one form or another, for its $55.6 billion whole loan portfolio, a multifamily investment securities portfolio of $23.4 billion, as well as its multifamily guarantee portfolio of $94.7 billion as of March 2015.

Both ratings consider the company's financial strength backstopped by the U.S. Treasury, knowledge of the multifamily lending environment combined with the support of its seller/servicer network. Due to the concentration of servicing for multifamily assets, servicer ratings are limited to the '2' category.

Fitch's servicer rating methodology is described in Fitch's reports 'U.S. Commercial Mortgage Servicer Rating Criteria', dated Feb. 14, 2014 and 'Rating Criteria for Structured Finance Servicers' dated April 23, 2015, which are available on Fitch's web site www.fitchratings.com.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria

Rating Criteria for Structured Finance Servicers (pub. 23 Apr 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864375

Rating Criteria for U.S. Commercial Mortgage Servicers (pub. 14 Feb 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=735382

Additional Disclosures

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=990111

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20150828005600/en/

Fitch Ratings
Primary Analyst
Adam Fox
Senior Director
+1-212-908-0869
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
James Bauer
Director
+1-212-908-0343
or
Committee Chairperson
Daniel Chambers
Managing Director
+1-212-908-0782
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
Email: [email protected]

Source: Fitch Ratings

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