DBRS Publishes Updated Methodology for Rating and Monitoring U.S RMBS Servicing Advance Transactions

DBRS, Inc. (DBRS) has today published an update to its methodology, “Rating and Monitoring U.S. RMBS Servicing Advance Transactions,” for rating and monitoring U.S. residential mortgage-backed securities (RMBS) servicing advance transactions. The methodology, effective as of the date of this press release, supersedes the previous methodology dated February 2015.

The methodology outlines DBRS’s approach for reviewing RMBS servicing advance transactions and the key analytical considerations when evaluating a transaction. These key considerations generally remain the same as the previous version of the methodology and include:
-- Operational risk review;
-- Financial condition of the servicer;
-- Historical advance recovery rates of the servicer;
-- Cash flow analysis;
-- Evaluation of the form and sufficiency of available credit enhancement for the respective ratings; and
-- Legal structure and opinions.

For this update, the SA Insight Workbench (the SA Workbench) concept generally remains the same as the previous methodology. The SA Workbench analyzes historical recovery data provided by the servicer and derives base-case and stressed recovery curves. These derived curves are an input for the cash flow analysis. DBRS made updates to the SA Workbench to factor in the greater depth of available historical servicer advance data as well as to distinguish analysis of servicer advance receivables with a general collections backstop.

Other minor changes in the methodology were made to achieve a consistent format with other Structured Finance methodologies, where applicable and appropriate.

DBRS deems the methodology updates to be non-material. There are currently no outstanding ratings for this asset class.

Notes:
DBRS criteria and methodologies are publicly available on its website http://www.dbrs.com under Methodologies.

The full methodology providing additional analytical detail is available by clicking on Rating and Monitoring U.S. RMBS Servicing Advance Transactions Methodology or by contacting us at info@dbrs.com.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.