In Brief: Fitch Downgrades for Fairbanks Capital

NEW YORK - Fitch Inc. downgraded Fairbanks Capital Corp.'s ratings as a servicer in several categories Tuesday, citing "a significant amount of uncertainty regarding Fairbanks' financial viability, management stability, and operational strength."

Fitch dropped Fairbanks' residential subprime primary servicer rating to RPS2-minus from RPS1, its alternative-A and home-equity primary servicer ratings to RPS2-minus from RPS1-minus, and its special servicer rating to RSS2-minus from RSS1.

The rating agency said it would keep the servicer ratings on "rating watch negative" status, where they were first placed on April 29.

In recent months Fairbanks, which is majority-owned by the San Francisco mortgage insurer PMI Group, has been accused by consumer activists and on Capitol Hill of predatory practices. Last week the company announced that it had restructured its executive management team and was overhauling its servicing practices.

Though PMI's management is now directly involved with the servicer's daily operations, Fitch said its analysts fear senior management defections and that Fairbanks might not be able to maintain a strong servicing operation and to continue to access lines of credit.

Fitch said in a press release that its analysts would conduct an on-site review of Fairbanks' four servicing operations in Utah, Texas, Florida, and Pennsylvania to make sure the company is still performing adequately and investigate the predatory-lending allegations.

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