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Negative Outlook for 2nd Lien Servicer SPS

Select Portfolio Servicing’s rating as a special servicer of second mortgages included in residential mortgage-backed securities has been maintained, though a cloud hangs over the company’s outlook.

The high-touch special servicer’s U.S. RMBS primary specialty servicer rating for closed-end second lien product has been affirmed by Fitch Ratings at ‘RPS1-‘, according to an announcement Wednesday.

“The affirmations reflect SPS’s continued system and process improvements and consistently improving portfolio performance,” Fitch stated in the news release. “The servicer evidences effective default management practices, strong management team and staff, and highly developed enterprise risk management controls and processes.”

But Fitch noted a negative outlook for Salt Lake City-based SPS because of the financial condition of parent Credit Suisse, which faces execution risk in its restructuring plan. Fitch explained that the financial condition of a servicer and its parent are important indicators of the servicers’ ability to meet obligations, make necessary advances, and fund its operations.

“Fitch’s financial review includes an assessment of the ability of the company to weather adverse market conditions, to finance expansions and to make capital investments as it focuses on sustaining or growing the service platform,” the press release stated.

SPS serviced 942,000 residential first and second mortgages for $179.5 billion as of Sept. 30.

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