Fitch upgrades HML’s special servicer rating

Fitch Ratings has upgraded Homeloan Management Limited’s residential mortgage special servicer rating to RSS2- from RSS3+.

It has also affirmed its UK residential mortgage primary servicer ratings at RPS2+Prime and RPS2+Sub-prime.

The ratings agency says the upgrade of the special servicer rating reflects the high levels of industry experience of senior management and the continued improvements to operational performance surrounding the management of defaulted mortgage loans.

HML had taken 218 properties into possession for the calendar year ending December 2010.

The company successfully sold 288 repossessed properties, of which only 6% were sold at property auctions. Of the properties sold at auction, proceeds received versus open market value stood at an average of 80%, rising to 101% for properties sold by private treaty. The average time from possession to sale stands at 185 days, which Fitch says is comparable to similarly rated peers in the current market.

Fitch says the continued support from its parent company, Skipton Building Society, together with a robust internal audit and governance plan further supports the affirmation of the primary servicer ratings.

In addition, Fitch notes that while training hours are below the Fitch rated benchmark, HML’s headcount has reduced by 12% over the past 12 months following redundancies and office closures. However, HML has continued to meet clients’ expectations through existing and enhanced service level agreements.

The primary servicing portfolio totalled £36.9bn and comprised 336,253 loans at end-December 2010, a decrease of 18% by value and 8.5% by number of loans. RMBS represents 38.9% of the total by value.

The UK portfolio includes various product types classified by value as prime,14%, sub-prime 43%, buy-to-let 17%, lifetime/reverse mortgages 20% and other products 6%.