Moody's Investors Service Inc. upgraded its servicer quality ratings for Litton Loan Servicing LP on Thursday, citing the Dec. 10 purchase of the Houston company by Goldman Sachs Group Inc.
The agency raised Litton's primary servicer ratings to SQ1-minus, from SQ2, for subprime mortgages; to SQ2-plus, from SQ2, for second liens; and to SQ2-minus, from SQ3, for manufactured-housing loans. Moody's also raised its rating for Litton as a special servicer to SQ1-minus, from SQ2. The ratings are on a scale of SQ1 ("strong") to SQ5 ("weak").
Moody's also removed these ratings from a review for possible downgrading. The review began last year when Litton's previous parent, C-Bass LLC in New York, was inundated with margin calls.
The upgrades reflect "the potential benefits the acquisition will provide to Litton's servicing stability from Goldman Sachs' financial strength," Moody's said. "As part of Goldman Sachs' mortgage business, Litton will have access to funding and other corporate resources which should enhance Litton's ability to compete in a consolidating market."
Litton's ratings also reflect "above-average collection results, strong loss mitigation, [and] strong foreclosure and … [property repossession] timeline management," Moody's said.
A spokesman for Goldman Sachs said the servicer is now a subsidiary of Goldman Sachs Bank USA, the investment bank's $19 billion-asset industrial loan company in Salt Lake City.
Moody's said that as of Feb. 29, Litton serviced 316,369 loans, totaling about $45.8 billion.
