NEW YORK--(BUSINESS WIRE)-- Fitch Ratings affirms The Bank of New York Mellon (BNYM) U.S. residential master servicer rating at 'RMS1'. The rating action is based on the company's enhanced operational procedures, improved modification controls and its ongoing expansion plans. The rating also reflects the strong management experience and expanded mandatory staff training. In addition, the rating action reflects the financial strength of its parent The Bank of New York Mellon which is rated 'AA-/F1+' with a Stable Outlook by Fitch

BNYM continued to make enhancements to its control, reporting and monitoring capabilities for modified loans and has increased its oversight functionalities over the primary servicers' activities due to the prevailing industry environment.

BNYM's master servicing is headquartered in New Albany, OH with a second fully functional operation located in Pittsburgh, PA. This site also provides additional back-up capabilities. Master servicing is part of BNYM's Global Structured Credit Group which includes the related businesses of ABS, MBS, CDO, CMBS, Document Custody, Loan Administration and Servicing, and Asset Solutions.

As of June 30, 2011, BNYM was master servicer for 65,947 loans totaling $12.15 billion. The portfolio is further broken out by product: Subprime-$2.1 billion; Prime-$4.9 billion; Alt-A-$3 billion; Reverse-$102.2 million and GSE-$1.9 billion. BNYM currently has oversight over 40 servicers and manages 147 non-agency RMBS transactions.

In November 2010, Fitch assigned a Negative Outlook for the entire U.S. Residential Mortgage Servicer ratings sector on increased concerns surrounding alleged procedural defects in the judicial foreclosure process. Responses to Fitch's survey of its rated servicers regarding internal procedures used to verify and execute foreclosure affidavits indicated that all servicers are taking this matter seriously and are continuing to work to resolve any issues uncovered. Fitch may place an individual servicer's ratings on Rating Watch Negative and/or downgrade the ratings if the servicer does not make a diligent and timely review of its processes and take immediate corrective action to remediate any foreclosure action or documentation failures. Fitch may take similar actions on a servicer's ratings if the impact of the additional costs that must be borne by the servicer significantly affect its financial condition. Until those conclusions are reached, the Negative Outlook on the sector affects all U.S. RMBS servicers.

Fitch believes BNYM's master servicing platform has the capacity and infrastructure to maintain and increase its master servicing capabilities, while pursuing its growth initiatives. Fitch will monitor BNYM's ability to maintain oversight of its primary servicers in a high default environment.

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 Servicers', dated Nov. 29, 2006 and 'Global Rating Criteria for Structured Finance Servicers' dated Jan. 31, 2011, which is available on the Fitch Ratings web site at www.fitchratings.com.

Additional information is available at www.fitchratings.com. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:
--'Rating U.S. Residential Mortgage Servicers', Nov. 29, 2006;
--'Global Rating Criteria for Structured Finance Servicers', Aug. 13, 2010;
--'Rating U.S. Residential and Small Balance Commercial Mortgage Servicer Rating Criteria', dated Jan. 31, 2011.

Applicable Criteria and Related Research:
Global Rating Criteria for Structured Finance Servicers
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547305
U.S. Residential and Small Balance Commercial Mortgage Servicer Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=600065

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KEYWORDS:   United States  North America  New York

INDUSTRY KEYWORDS:   Professional Services  Finance

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