Fitch Ratings announced recently that it has affirmed a primary prime servicer rating for New American Funding (NAF).
Fitch said it affirmed a U.S. primary prime servicer rating of “RPS3.”
Fitch rates residential mortgage primary, master, and special servicers on a scale of 1 to 5, with 1 being the highest rating. Within some of these rating levels, Fitch further differentiates ratings by plus (+) and minus (-) as well as the flat rating
The ratings firm also said the affirmed rating and stable outlook reflect NAF's “experienced management team and staff, enterprise-wide risk environment and compliance management system, satisfactory loan-servicing performance, and effective servicing technology.”
Broker Solutions Inc., doing business as New American Funding (NAF), is a family-owned 'S' corporation under California law and is an independent mortgage lender based in Orange County, Calif.
Founded as a loan processing and underwriting consumer call center in 2003, the company is a Fannie Mae, Freddie Mac, and Ginnie Mae direct lender, seller, and servicer that operates its own builder- and real estate-based lending divisions.
Historically, Fitch noted, NAF originated loans that were sold or sub-serviced by a third party. In 2014, however, the company brought all servicing in-house.
NAF’s loan-servicing business is based in Austin, Texas, and has 233,350 loans under management, representing an unpaid principal balance of $52.5 billion, Fitch said in its ratings report. Approximately 60% of new loan origination business is sourced through NAF’s retail channel, while about 40% is sourced through its call center operations, the company said.
According to Fitch, as of June 30, of the loans in NAF's loan-servicing portfolio, the investor distribution consists of Fannie Mae (48%), Freddie Mac (15%), Ginnie Mae (29%), NAF-owned (4%), and third-party servicing (4%) loans.
NAF is also expanding into Non-QM lending and looking at “opportunistic sub-servicing arrangements” to diversify its revenue, Fitch said. NAF management indicated that a business strategy consisting of Non-QM originated loans forms a part of NAF's future business plan, it said.
NAF's loan servicing performance metrics are “generally competitive with industry peers,” Fitch said in its report, adding that its call center performance metrics “are highly competitive with industry averages.” Collection and loss-mitigation efforts are acceptable overall, it said, while foreclosure case handling, tracking and performance monitoring are efficiently managed and the REO process is well-controlled.
Following Fitch’s last review, NAF adopted a new risk-based testing program in January 2022. The program is designed to “validate regulatory change implementation and corrective action remediation, and to test specific risk topics derived from complaints, internal audits, and third-party auditors,” Fitch said. NAF reported receiving only 35 CFPB-referred complaints during the annual period ending June 30, 2022, with no statutory delays.
Fitch said it does not publicly rate NAF's credit and financial strength, but its financial institutions group reviewed NAF's financial statements to provide an internal assessment, as a company's financial condition is a component of the servicer rating analysis.
