Fitch Upgrades Homestreet Bank's RMBS Servicer Rating

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has upgraded HomeStreet Bank's (HSB) U.S. residential mortgage servicer rating as follows:

--U.S. residential primary servicer rating for Prime product upgraded to 'RPS3' from 'RPS3-'; Outlook revised to Stable from Positive.

The upgrade and revision of the Rating Outlook are based on HSB's experienced servicing platform, operational improvements and technology enhancements since the prior review, and comprehensive internal control environment. In addition, the rating incorporates the financial condition of HSB, a non-publicly rated entity.

HSB has made a number of operational improvements and technology enhancements since Fitch's prior review. HSB hired an experienced loss mitigation manager who has enhanced the structure of the loss mitigation department, expanded its quality assurance programs, and created a new department to manage private investor servicing requirements. HSB also implemented call recording and formalized its phone monitoring of customer service and collections staff.

Technology enhancements include upgrading a number of existing systems and implementing new systems to support the loan servicing operations. The enhancements provide increased workflow automation through the use of process scripts and additional borrower self-service capabilities. HSB also implemented an application that automates the underwriting decision process for modifications, improving consistency and accuracy.

HSB's internal control environment includes internal audit, corporate compliance, and risk management functions. Internal audit is headed by the chief audit officer who reports directly to the audit committee of the board of directors. The corporate compliance department is responsible for monitoring and reviewing changes in federal, state and local laws and regulations, and assessing their impact on operations. The risk management committee determines and monitors key risk indicators, and provides reports quarterly to the board of directors.

HSB is a Washington state chartered savings bank with a network of more than 100 retail branches, home loan centers, commercial and residential construction lending centers in the western United States and Hawaii. HSB also services residential mortgage loans originated at point-of-sale in 44 Windermere Real Estate offices through an affiliated business arrangement.

As of Sept. 30, 2015, HSB was servicing over 77,000 residential mortgage loans totaling $16.4 billion, including 8,700 non-agency prime loans totaling $2.1 billion. HSB has extensive experience securitizing mortgages through Fannie Mae, Freddie Mac, and Ginnie Mae, but has not issued any private-label securities (PLS). The company is currently servicing loans included in six PLS issued by other financial institutions.

HSB has an established REO department but handles a relatively low volume of REO assets due to the composition of its servicing portfolio. The servicing portfolio is comprised of relatively high quality loans, with only 1.4% of the overall servicing portfolio 60+ days delinquent, in bankruptcy, or in foreclosure as of Sept. 30, 2015. In addition, 57% of HSB's servicing portfolio is comprised of Fannie Mae and Freddie Mac loans, which limits the volume of REO properties that the company manages.

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

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=996516

Endorsement Policy

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

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View source version on businesswire.com: http://www.businesswire.com/news/home/20151210006555/en/

Fitch Ratings
Primary Analyst
Thomas Crowe
Senior Director
+1-212-908-0227
Fitch Ratings, Inc.
33 Whitehall St.
New York, NY 10004
or
Secondary Analyst
Zoya Ramzanali
Analyst
+1-212-612-7796
or
Committee Chairperson
Suzanne Mistretta
Senior Director
+1-212-908-0639
or
Media Relations
Sandro Scenga, New York, +1-212-908-0278
[email protected]

Source: Fitch Ratings

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