Fitch maintains Vertex’s negative watch rating

Fitch Ratings has maintained Vertex Mortgage Services’ ‘rating watch negative’ status due to its declining portfolio.

Fitch says it is keeping Vertex’s residential mortgage primary servicer ratings of RPS2- (prime) and RPS2- (subprime) on rating watch negative, which implies that its ratings will either be downgraded or affirmed following continued monitoring over the next three months.

It says the rating watch negative reflects the size of Vertex’s existing servicing portfolio, which has declined since 2008.

The transfer of DB mortgages, which represents approximately 60% of Vertex’s total servicing portfolio, is underway and expected to complete by the end of 2012.

Fitch says the rating also reflects the low level of internal audit activity at Vertex in recent years, with no end-to-end internal audits having been undertaken in the past four years.

The ratings agency adds that the ratings also reflect an enhanced training framework, strengthened risk management and several IT developments. 

As of January 2012, Vertex had total assets under management of £2.64bn, comprising subprime (64%), buy-to-let (32%) and right-to-buy (4%) mortgages, including over 20,000 mortgage loans.

VMS administers securitised loans totalling £1.75bn, representing 66% of the total portfolio.