Servicer Rating Cut at Citi

CitiMortgage Inc.’s ranking as a servicer of prime residential loans was downgraded to “average” from “above average.” The same action was taken on its rating as a servicer of residential subprime mortgages.

In addition, sub-rankings for management and organization and loan administration were cut.

The downgrade came Tuesday from Standard & Poor’s Ratings Services.

“The downgrades reflect several internal audits that were not considered satisfactory and identified issues that we consider to be material, though the company has indicated that it has remediated or is in the process of remediating many of these issues,” S&P stated.

While CitiMortgage has responded to the Office of the Controller of the Currency consent order and multi-state servicer settlement by establishing additional controls, training, technology enhancements and new oversight processes — internal audits have uncovered issues that S&P considers to be material.

In addition, CitiMortgage has experienced high turnover in collections and at its customer service offshore vendor.

“The downgrades primarily reflect a review of internal audit reports that cited the need for improvement in certain servicing functions,” the ratings agency stated. “The issues primarily pertain to areas of default.”