Fitch upgrades Crown Mortgages

Fitch Ratings has upgraded Crown Mortgage Management Limited’s UK servicer ratings.

It is also removing them from Rating Watch Evolving after improvements in Crown’s financial condition over the last year.

Fitch says it has resolved all outstanding internal audit findings identified in 2008, specifically those deemed ’fundamental’ or ’significant’, and it has enhanced to the overall operational structure and governance.

The ratings also reflect improvements in Crown’s residential arrears management group including the hiring of numerous loss mitigation and collections specialists.

While experience levels among the collections staff is below rated UK peers, training has increased considerably to mitigate concerns surrounding less experienced staff.  

Furthermore, continued enhancements to Crown’s IT platform have resulted in improved management and exception reporting, enabling the company to more effectively manage its rapidly growing portfolio.   

The recapitalisation of Crown’s UK and German servicing operations through an agreement with a private equity fund sponsored by Forum Partners was completed in April 2009, and Forum continues to provide financial and management support to Crown.

Crown has also been divested away from the German bank, Crown Westfalen Bank AG, which is currently in liquidation.

As part of the servicer rating process, Fitch conducted a review of Crown’s financial condition and acknowledges the improved financial situation as a result of the partnership with Forum, which is reflected in the ratings.

Fitch employed its global and UK servicer rating criteria in analysing the servicer’s operations and financial condition, with the former criteria including a comparison against similar UK servicers as part of the review process.

At the end of July 2010, Crown’s UK servicing portfolio totalled £3.35bn comprising nearly 20,300 loans – a 56% and 129% increase from May 2009 by value and number of loans respectively.

The residential mortgage portfolio includes 12,468 loans totalling £1.53bn while the remaining portfolio includes ’small balance’ commercial loans with an average loan size of £1.3m.  

Crown’s securitised portfolio includes four RMBS and two CMBS transactions with the most recent deal being the Diversity Mortgages No. 1 Limited, a CMBS transaction transferred from Northern Rock in March 2009.