Three of Bank of America’s mortgage servicer quality ratings were downgraded and could be cut even further.
Bank of America, N.A.’s, primary servicer rating for prime residential mortgages was reduced to SQ2- from SQ2.
Its primary servicer rating for subprime home loans and its special servicer rating for residential loans were both downgraded to SQ3+ from SQ2-.
Moody’s Investors Service, which announced the downgrades, rates mortgage servicers on a scale where SQ1+ is the best possible rating and SQ5- is the worst.
“The downgrade was mainly due to the substantial lengthening of the company’s foreclosure referral and foreclosure sale timelines as a result of the foreclosure process scrutiny starting in late 2010,” the New York-based ratings agency explained.
Moody’s began a review for the possible downgrade of the Bank of America Corp. subsidiary in October 2010 because of concerns about its document execution practices.
BofA has since resumed foreclosures in nearly all judicial states but identified the need to enhance oversight of the foreclosure process and monitoring of third-party vendors.
Moody’s said that BofA serviced 12,903,857 loans for $2 trillion as of June 30, 2011.
