Fitch bumps prime, Alt-A ratings
By MortgageDaily.com staff
8/31/2005

Senior management changes and several operational enhancements have apparently improved National City Mortgage Corp.'s ability to service prime and Alt-A mortgage loans.

The Miamisburg, Ohio-based lender saw its residential primary servicer rating bumped by Fitch Ratings to 'RPS2' from 'RPS2-' for prime and Alt-A products, according to an announcement Tuesday from Fitch.

Companies are rated on a scale of 1 to 5, with 1 being the highest rating. The ratings are further differentiated by a plus (+), minus (-) or flat rating.

National City's "long-time" Chairman and CEO, Leo Knight, will retire this year and be replaced by Buck Bibb -- whose promotion triggered a slew of other executive changes.

The company serviced over 1.1 million mortgage loans for more than $167 billion as of June 30, 2005, Fitch said. According to the company's first quarter earnings report, residential servicing totaled $157 billion.

Prime loans made up $76.9 billion of the servicing portfolio, Fitch reported, while Alt-A accounted for just $2.7 billion. Other components of the portfolio reportedly include $24.8 billion in FHA/VA mortgages and $29.3 billion in nonconforming loans.

The lender had second quarter originations of $18.5 billion, including subprime production of $4.8 billion from subsidiary First Franklin.

Fitch said the upgrades were based on "the financial strength of the company's parent National City Bank of Indiana and its ultimate parent, National City Corporation...whose long-term debt is rated 'AA-' by Fitch. The rating also reflects the company's experienced and tenured management team, effective performing loan management procedures, solid default management practices, and its extensive training programs."

Fitch also noted National City's strategy of internal originations and retention, the construction of a 66,000 square foot facility, and "several processing changes, technology enhancements, and upgrades to improve operations and increase productivity, including advancements to its already extensive training programs and increased default management capacity."

National City "will remain a solid servicer of prime and Alt-A product," the ratings agency said, but will continue to be monitored on its "progress in effectively managing its growth initiatives while maintaining performance in a rising delinquency environment."

The company is reportedly training employees to deal with a possible increase in delinquency next year.

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