Fitch Ratings assigned U.S. primary servicer ratings for non-QM lender A&D Mortgage LLC. The ratings provided show a stable outlook for the company.
Fitch stated that A&D's assigned U.S. primary servicer ratings and “stable outlook” reflect the company's experienced management team, satisfactory loan servicing performance metrics, effective enterprise-wide compliance management systems and efficient technology environment.
“The company utilizes its risk management structure comprising systems and processes to reduce systemic risks to the organization. A&D's control environment is predicated on the three lines of defense consisting of quality control, compliance, and a third-party internal auditor,” according to Fitch. “A&D has developed comprehensive policies and procedures for use by its staff to promote standard servicing practices and compliance with regulations and governing laws. The company employs an effective vendor management program that includes vendor due diligence, approval, and continuous monitoring.”
Fitch also pointed out that A&D has been subject to a number of state audits over the past few years with no material findings. These audits include a third-party vendor performs servicing quality control audits of A&D's two subservices responsible for servicing a portion of its loan servicing portfolio, a review of quarterly quality control report performed during the past 12 months which indicated satisfactory results, and a review of the company's Uniform Single Attestation Program for mortgage bankers for the period Aug. 1, 2020 through July 31, 2021. The third aforementioned audit reflected certain instances of non-compliance pertaining to proper signoff of bank reconciliation statements and unreconciled custodial amounts past 90 days, according to Fitch.
“A&D's loan servicing platform performance metrics, as well as those of its two subservicers, exhibit satisfactory performance,” according to the ratings. “Call center performance is competitive with industry averages, while default administration in collections and homeownership retention is comparable with industry averages. Bankruptcy and foreclosure case handling, tracking, and performance monitoring are efficiently managed.”
Additionally, Fitch believes that A&D has an efficient technology environment that is built upon a third-party loan servicing platform that houses all borrower information. A&D is in the process of transitioning to a new servicing platform in hopes of better accommodating future growth.
As the COVID pandemic continues to re-emerge with new cases and variants popping up, Fitch says that A&D's disaster recovery and business continuity plan incorporates pandemic planning and is based on a combination of remote working and secondary branch offices for physical work resumption and is tested annually.
In April of 2021, A&D introduced a new prime Jumbo loan product, which the company stated made it more efficient for brokers to qualify their borrowers. In June of 2021, the company also issued a securitization which included 72% of non-QM loans.