Morningstar DBRS Places Wells Fargo Commercial Mortgage Servicing's Rankings Under Review With Negative Implications

DBRS, Inc. (Morningstar DBRS) placed its MOR CS1 primary servicer and master servicer rankings and its MOR CS2 special servicer ranking for Wells Fargo Commercial Mortgage Servicing (WFCMS) Under Review with Negative Implications. WFCMS is an operating division of Wells Fargo Bank, N.A. (Wells Fargo).

The placement of the rankings Under Review with Negative Implications follows the recent announcement by Wells Fargo & Company, the parent company of Wells Fargo, that it has entered into an agreement to sell its non-agency third-party servicing business and all of its third-party special servicing business to Trimont Real Estate Advisors LLC (Trimont). Excluded from the sale are Fannie Mae, Federal Housing Administration, Freddie Mac primary-serviced, and Wells Fargo balance sheet-held loans. The transaction is to include the transfer to Trimont of the corresponding WFCMS management team and staff (U.S. and offshore) and supporting technology applications.

As the transaction moves toward closing, Morningstar DBRS will monitor WFCMS' ability to fulfill its ongoing duties and obligations without any service disruptions.

As of June 30, 2024, the transferring primary and master servicing portfolio contained 20,219 loans with an aggregate unpaid principal balance (UPB) of approximately $477.4 billion. As of June 30, 2024, WFCMS was a named special servicer on 2,654 loans with an aggregate $89.34 billion UPB involving 156 rated securitizations. Its active special servicing portfolio consisted of 17 loans with an aggregate $4.62 billion UPB.

All rankings are subject to surveillance, which could result in rankings being raised, lowered, placed under review, confirmed, or discontinued by Morningstar DBRS.

Morningstar DBRS North American commercial mortgage servicer rankings are not credit ratings. Instead, they are designed to evaluate the quality of the parties that service commercial mortgage loans. Although the servicer's financial condition contributes to the applicable ranking, its relative importance is such that a servicer's ranking should never be considered as a proxy of its creditworthiness.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is North American Commercial Mortgage Servicer Rankings (August 23, 2024), https://dbrs.morningstar.com/research/438283.

For more information on this industry, visit dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.

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