DBRS Confirms First National Financial’s Primary Residential Mortgage Servicing and Special Residential Mortgage Servicing as Good

DBRS Limited (DBRS) has today confirmed both the Primary and Special Residential Mortgage Servicing of First National Financial LP (FNF or the Company) as Good.

The confirmation reflects DBRS’s review of the changes and updates since the last review in May 2014 in the areas of company and management, asset administration, loss management, technology, financial condition and controls and compliance.

The confirmation is based on the following factors:

(1) FNF’s more than 25 years of experience in originating and servicing residential loans.

(2) Demonstrated strength in technology and commitment to providing customers with superior customer service, such as the implementation of paperless technology that enables cost-effective and efficient residential mortgage origination and administration.

(3) Ability to grow mortgages under administration and capitalize on servicing economies of scale.

(4) The comfort of mortgage insurers with the Company’s servicing capacity, where 83% of its serviced portfolio is insured and no claim has ever been rejected by the mortgage insurers.

(5) FNF undertook many initiatives since 2009 to improve servicing capability and efficiency in the face of a challenging economic environment and rapidly increasing mortgage delinquencies and defaults. Mortgage delinquencies have since stabilized and decreased significantly following a cleanup of seriously delinquent files, all of which were paid out in full. The overall cure rate for delinquent mortgages within 120 days also improved to approximately 98% in 2014, according to DBRS estimates.

The Company, rated BBB by DBRS, is a Toronto-based originator, underwriter and servicer of predominantly prime residential mortgages and commercial mortgages. With approximately $85.9 billion ($67.0 billion residential and $18.9 billion commercial) in mortgages under administration as of December 31, 2014, the Company is Canada’s largest non-bank originator and underwriter of mortgages.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

The applicable methodology is Operational Risk Assessment and Residential Mortgage Servicer Evaluation for Canadian Structured Finance (April 2015), which can be found on our website under Methodologies.