Moody's Investors Service Inc. said Monday that it left its servicer ratings for Home Loan Services Inc. unchanged because Merrill Lynch & Co. Inc. is no longer pursuing a sale of the Pittsburgh servicing unit.
In March, Merrill said it was exploring a sale of Home Loan Services, the remaining piece of its First Franklin Financial Corp., which was discontinuing originations. Moody's put its ratings for the unit on review.
On Monday the rating agency said it had ended the review, because Merrill had removed "the uncertainty regarding … ownership" of the servicer.
The agency's servicer ratings are on a scale of SQ1 ("strong") to SQ5 ("weak"). It rates Home Loan Services SQ2 as a primary servicer of subprime loans; SQ3-plus as a primary servicer of second-lien loans; SQ2-minus as a primary servicer of prime loans; and SQ2 as a special servicer.
Since 2000 most of Home Loan Services' volume was generated by First Franklin, Moody's said, but the servicer "plans to adjust its strategy and to pursue alternative servicing programs such as third-party and special servicing, which it plans to implement in the fourth quarter." Home Loan Services has a "limited track record" in these areas, Moody's said.