NEW YORK--(BUSINESS WIRE)--Fitch Ratings has upgraded the commercial mortgage master and primary servicer ratings of Wells Fargo Bank, N.A. (Wells Fargo) as follows:
--CMBS Primary Servicing to 'CPS1-' from 'CPS2+';
--CMBS Master Servicing to 'CMS1-' from CMS2.
Fitch has also affirmed Wells Fargo's commercial mortgage special servicer rating at 'CSS2-'.
The upgrades of the master and primary servicer rating reflect the completion of Wells Fargo's Systems Process Integration (SPI) project and subsequent operational improvements observed by Fitch during its annual review as well as continued strong internal controls evidenced by lack of exceptions or significant audit findings, active special servicer outreach, absence of over advancing for loans or significant tax penalties, operating statement and analysis collection ratios comparable to Fitch rated peers, depth and experience of the management team, and positive Fitch Surveillance experience. The SPI project began in April 2011 and combined the legacy commercial servicing portfolios and technology platforms of Wells Fargo and Wachovia Bank, N.A. (Wachovia). Since the acquisition of the Wachovia in 2008, Wells Fargo maintained separate platforms; however, the completion of the SPI project has allowed Wells Fargo to adopt best practices under a single set of policies and procedures and upgrade their commercial servicing system to McCracken Strategy V17 while retiring redundant and certain ancillary systems.
Fitch observed a number of operational strengths and efficiencies achieved as a result of the SPI project including; more streamlined workflow with increased compliance and quality control metrics, the ability to more evenly distribute loan servicing functions across offices to improve efficiency, and introduction of a new investor reporting web portal with improved functionality and reporting.
The affirmation of the special servicer rating reflects the significant experience of asset management staff working out highly structured commercial real estate loans supported by internal controls and technology which Fitch believes sufficient for current volume of defaulted loans. Fitch noted the growing volume of loans for which Wells Fargo is named special servicer and the lack of a centralized asset management system with programmatic internal controls as a concern relative to other Fitch rated conduit special servicers. Wells Fargo is exploring the development of a centralized asset management and surveillance system as phase two of its SPI project.
All of the servicer ratings incorporate the financial strength of Wells Fargo Bank and its commitment to CMBS servicing.
As of Dec. 31, 2012, Wells Fargo was the master servicer for 363 CMBS transactions comprised of 24,068 loans with an outstanding balance of $332.3 billion, of which Wells Fargo is primary servicer for 21,247 of the loans totaling $311.8 billion. As of the same date, the bank was actively special servicing 26 CMBS loans totaling $1.9 billion and was responsible for nine CMBS real estate owned assets valued at $370.1 million. Wells Fargo's named special servicing portfolio has nearly doubled from the 56 transactions totaling $22.6 billion at the end of 2010 to 69 transactions totaling $40.2 billion at the end of 2012.
The servicer rating is based on the methodology described in Fitch's reports 'U.S. Commercial Mortgage Servicer Rating Criteria,' dated Feb. 18, 2011, and 'Rating Criteria for Structured Finance Servicers' dated Feb. 6, 2013, available on Fitch's web site www.fitchratings.com.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'U.S. Commercial Mortgage Servicer Rating Criteria' (Feb. 18, 2011);
--Rating Criteria for Structured Finance Servicers' (Feb. 6, 2013).
Applicable Criteria and Related Research:
U.S. Commercial Mortgage Servicer Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=584005
Rating Criteria for Structured Finance Servicers
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=699690
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=793708
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