DBRS Morningstar Confirms First National Financial LP’s Primary Residential Mortgage Servicing and Special Residential Mortgage Servicing at Good

DBRS Limited (DBRS Morningstar) confirmed both the Primary Residential Mortgage Servicing and the Special Residential Mortgage Servicing of First National Financial LP (FNF or the Company) at Good. The confirmations reflect DBRS Morningstar’s review of the changes and updates since the last review in May 2020 in the following areas: company and management; asset administration, reporting, and customer service; default and loss management; technology; financial condition; and controls and compliance. The servicer evaluations may be taken as evidence that FNF has satisfied DBRS Morningstar’s expectations to act as a third-party subservicer for residential mortgage-backed securities and to be relied on by third parties as such.

The confirmations are based on the following factors:

(1) FNF’s more than 30 years of experience in originating and servicing residential loans.

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

(3) The comfort of mortgage insurers with the Company’s servicing capacity, where nearly 73% of its serviced portfolio is insured and no claim has ever been rejected by the mortgage insurers.

(4) The Company’s Long-Term Issuer Rating of BBB with a Stable trend by DBRS Morningstar.

On March 11, 2020, the World Health Organization declared the Coronavirus Disease (COVID-19) outbreak a pandemic. To slow the spread of the virus in Canada, many businesses have shut down and consumers have been laid off as a result. To help customers experiencing financial hardship, the Company worked with affected customers and offered relief programs, such as mortgage payment deferrals for up to six months. Performance has also been supported by a strong housing market and government relief programs.

DBRS Morningstar places emphasis on a servicer’s ability to manage delinquency roll rates, offer effective workouts, and minimize recidivism rates during a market downturn and it will continue to monitor FNF's performance in these areas as the ultimate effects of the ongoing pandemic remain to be seen and the expiration of government relief along with elevated unemployment will continue to test borrowers’ ability to meet payment obligations. All staff are currently working from home and FNF has confirmed that the systems have been running without interruptions or capacity concerns.

The Company is a Canadian-based originator, underwriter, and servicer of predominantly prime residential mortgages and commercial mortgages. With approximately $118.7 billion ($83.6 billion residential and $35.1 billion commercial) in mortgages under administration as of December 31, 2020, FNF is Canada’s largest nonbank mortgage originator and servicer.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

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

The principal methodology is Operational Risk Assessments for Canadian Structured Finance (April 15, 2021), which can be found on dbrsmorningstar.com under Methodologies & Criteria.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

For more information regarding structured finance rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/358308.

For more information regarding the structured finance rating approach and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/359905.

The entity or its related entities did participate in the evaluation process for this action. DBRS Morningstar had access to the accounts and other relevant internal documents of the entity or its related entities in connection with this action.

The full report providing additional analytical detail is available by clicking on the link under Related Documents below or by contacting us at [email protected].

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at [email protected].

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