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Servicer Evaluation: Rushmore Loan Management Services LLC

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Servicer Evaluation: Rushmore Loan Management Services LLC

Ranking Overview
Subrankings
Servicing category Overall ranking Management and organization Loan administration Outlook
Residential primary ABOVE AVERAGE ABOVE AVERAGE ABOVE AVERAGE Stable
Residential special ABOVE AVERAGE ABOVE AVERAGE ABOVE AVERAGE Stable
Financial position
SUFFICIENT

Rationale

S&P Global Ratings' rankings on Rushmore Loan Management Services LLC (Rushmore) are ABOVE AVERAGE as a residential mortgage loan primary and special servicer. On May 14, 2021, we affirmed the rankings (please see "Rushmore Loan Management Services LLC ABOVE AVERAGE Residential Primary And Special Servicer Rankings Affirmed," published May 14, 2021). The outlook on the rankings is stable.

Our rankings reflect Rushmore's:

  • Experience and turnover levels that are generally competitive with peers';
  • Satisfactory training regimen;
  • Solid systems environment that was enhanced in areas affecting escrow, investor reporting, and customer service, among others;
  • Multiple levels of internal controls, including an annual Statement on Standards for Attestation Engagements (SSAE) 18 exam;
  • Effective complaint management process, which is being improved through recommendations made by an outside entity who reviewed the department;
  • Generally competitive servicing metrics;
  • Well-controlled default management practices;
  • Delinquency levels that have experienced modest increases due to the COVID-19 pandemic; there could be further default challenges depending on future economic conditions; and
  • Somewhat informal career pathing, which is improving.

Since our prior review (see "Servicer Evaluation: Rushmore Loan Management Services LLC" published Sept. 4, 2019), the following changes and/or developments have occurred:

  • To further grow its special serviced portfolio, Rushmore became involved in the Ginnie Mae (GNMA) early-buyout program.
  • It employed a unified software tool for use in its quality control, compliance, and call monitoring areas.
  • An ombudsman's office was established to provide additional tracking and feedback regarding complaints.
  • Rushmore's quality control department now performs quarterly testing of the vendor management department.
  • The company's new loan set-up department has separate bulk and flow teams to handle such acquisitions.
  • Rushmore created a customer experience team to further assist with borrower customer communication and feedback.
  • It implemented various enhancements to its government servicing capabilities.

The outlook on the rankings is stable. Rushmore continues to implement improvements throughout the operation to further enhance its overall structure. Rushmore should remain a highly competent residential primary and special servicer. Assuming the company continues to improve and experiences no deterioration in qualitative or quantitative metrics, a subranking upgrade may be considered in the future.

In addition to conducting an onsite meeting with servicing management, our review includes current and historical Servicer Evaluation Analytical Methodology data through Dec. 31, 2020, as well as other supporting documentation provided by the company.

Profile

Servicer Profile
Servicing location Dallas, Texas
Loan servicing system Black Knight Financial Services - MSP
Portfolio types Prime and special
As of Dec. 31, 2020
Number of servicing employees 513
Volume (mil. $ unpaid principal balance) 64,832.60
Loan count 368,969

Originally established in 1999 under the name of Peoples Choice Home Loans Inc., the company filed for bankruptcy protection in March 2007 and was acquired by UBS in the second quarter of 2007. Subsequently renamed UBS-SSG (special servicing group), it became a subservicer for Roosevelt Management Co. (founded in 2008; Roosevelt) beginning in September 2009. Roosevelt officially acquired the UBS-SSG platform in August 2010 and later rebranded it as Rushmore.

Rushmore has domestic facilities located in Dallas; Irvine, Calif.; Oklahoma City, Okla.; and San Juan, Puerto Rico; the latter location services domestic accounts and handles U.S. assets pertaining to certain default tasks (e.g., loss mitigation and foreclosure) on the Roosevelt portfolio. Rushmore's captive asset management firm, Dakota Asset Services LLC (Dakota), manages real estate-owned (REO) properties. Two offshore vendors based in India and Manila handle certain back-office functions; only Manila assists with customer-facing operations. Combined, these two sites employ almost 400 staff.

The Oklahoma City office handles the GNMA portfolio, maintaining responsibility for 30-plus day collections, loss mitigation, property preservation, and claims functions, with remaining services leveraged through the other sites.

In addition to servicing re-performing loans (RPLs) and non-performing loans (NPLs), Rushmore has a large mortgage servicing rights (MSRs) portfolio and also a small subordinate-lien portfolio comprising more than 21,000 loans that are not included in this analysis. Management continues to acquire mainly RPLs for its special serviced portfolio, and is increasing its NPL business by becoming active in the GNMA early-buyout business, obtaining loans from both third-party (10 such clients) and captive (Roosevelt) sources. Rushmore believes it can acquire $1 billion in early buyouts from third-party clients and another $3 billion from Roosevelt in 2021 depending on market conditions. As of February 2021, the portfolio primarily consists of MSRs (46%) and RPLs (39%).

Due to a lack of opportunities to competitively acquire assets in Puerto Rico, the portfolio is in a runoff mode. Rushmore services slightly less than 4,000 such accounts as of March 2021, of which more than 50% are delinquent.

Rushmore experienced modest year-over-year growth (see table 1), mainly reflected in the prime portfolio, while special serviced accounts remained stable. Rushmore Correspondent Lending Services, a division of Rushmore, provides recapture/refinance activities on the existing portfolio, originating approximately $3 billion in mortgage loans in 2020 through its two offices.

Table 1

Portfolio Volume
Prime Special
Units (no.) Volume (mil. $) Units (no.) Volume (mil. $)
Dec. 31, 2020 181,392 35,254.34 187,577 29,578.25
Dec. 31, 2019 150,172 27,288.68 188,108 30,984.50
Dec. 31, 2018 127,526 23,285.77 164,013 25,935.81
Dec. 31, 2017 62,277 13,541.12 104,435 17,022.24
Dec. 31, 2016 37,585 8,949.51 52,604 9,707.81

Rushmore is an approved subservicer for Fannie Mae (including special servicer), Freddie Mac, and GNMA. The company is also an approved servicer for the U.S. Department of Agriculture and the Federal Home Loan Bank, as well as the Veterans Administration and FHA (Title II). Subservicing represents almost 75% of the portfolio.

Rushmore has a satisfactory geographic distribution of its accounts (see table 2).

Table 2

Portfolio Distribution By State
Prime Special
Top five states Units (%) Unpaid principal balance (%) Top five states Units (%) Unpaid principal balance (%)
Texas 8.03 7.01 California 15.00 25.36
California 7.81 11.53 Florida 9.86 9.55
Florida 7.75 7.81 New York 7.24 10.47
Virginia 5.43 7.23 Texas 6.07 3.23
Ohio 4.53 2.84 Louisiana 4.88 1.72
Other 66.45 63.58 Other 56.95 49.67
Total 100.00 100.00 Total 100.00 100.00

Management And Organization

The management and organization subrankings are ABOVE AVERAGE for primary and special servicing.

Organizational structure, staff, and turnover

Rushmore's senior and middle management exhibit experience levels that are better than relevant peers while tenure is similar:

  • Senior managers average 31 years of industry experience and seven years' tenure.
  • Middle management has 17 years of mortgage experience and five years' tenure.
  • Management turnover is 11% and staff turnover is 15%, the former of which is somewhat higher than peers while the latter is competitive with peers.

Each of the respective senior servicing managers, including the Puerto Rico-based senior vice president overseeing that operation, reports to the president of servicing.

Training

Rushmore's well-designed training program uses various formats (e.g., classroom, computer-based, on-the-job [OTJ] instruction) to acclimate new hires, including the offshore staff, with their job responsibilities. Highlights of the training program are as follows:

  • Call center employees complete an approximate four-week program.
  • Loss mitigation staff complete a three-week program.
  • The company has certified master trainers in various departments (i.e., more experienced subject matter experts [SMEs]) for OTJ instruction. Certified SMEs are also in every department.
  • Bilingual staff must complete various English-language competency courses.

Career pathing remains somewhat informal, although management has some leadership and employee development programs. Based on position, there are expected paths to advance within the department.

Systems and technology

Rushmore operates with good systems and support. In 2020, it significantly enhanced its proprietary website and mobile application, which resulted in several borrower communication improvements. A redesign of its interactive voice response (IVR) system also created a more intuitive user-friendly interface.

Rushmore maintains a disaster recovery and business continuity plan, including response procedures to address operational disruption as a result of a pandemic event. Rushmore implemented its plan due to the COVID-19 pandemic. Management reported that there were no disruptions to the company's operations or data facilities.

Servicing system applications 

Most applications were developed internally and are integrated with the main servicing system, Black Knight Financial Services' (BKFS) MSP. Its proprietary technology infrastructure includes:

  • ReaLM loss mitigation software that provides various data to Rushmore's clients, including communication on approvals/denials and rules-based investor-specific loss mitigation alternatives, among other items;
  • A modification application, which allows for automated modification documentation generation for all investors;
  • A document imaging system;
  • Optical character recognition and extraction technology to expedite new loan boarding audits and improve data quality;
  • The Pentagon database platform, which is used for due diligence, loan boarding audits, and complaint management;
  • ReaLM For Investors portal, which provides detailed pool and loan information; and
  • A Centralized Intelligent Analytics application that generates reporting and data analytics.

Rushmore hired BKFS to help maximize its servicing of government loans by analyzing processes and making recommendations. Rushmore introduced a proprietary tool to its call center that consolidates several applications into a unified screen so agents can access relevant information in one location versus having to switch between different areas. Certain completed and ongoing system changes have allowed Rushmore to begin private-label servicing of loans. Additionally, management plans to introduce a speech analytics tool into the call center by the early third-quarter 2021.

Business continuity and disaster recovery 

Rushmore's administration and oversight of its disaster recovery and business continuity plan include the following:

  • Annual testing and recertification of the plan and associated calling tree; and
  • Use of a third-party vendor site for its recovery objectives, while also using its existing sites for disaster recovery purposes when appropriate.

The disaster recovery plan for the Dallas office was tested in 2020 and management reported no material issues.

Cybersecurity 

Onshore/offshore staff address cybersecurity issues. Highlights of Rushmore's dedicated information security procedures include:

  • Monthly internal penetration testing performed by IT staff, along with yearly testing by an outside vendor;
  • No significant issues revealed in the last external test completed in December 2020;
  • Rotation of the vendor approximately every year; and
  • Monthly internal phishing tests for staff and annual tests for vendors.
Internal controls

Rushmore's enterprise risk management (ERM) framework consists of multiple auditing mechanisms that include quality assurance (QA), quality control (QC), compliance, internal audit (IA), and a separate SSAE 18 exam. These operational oversight and controls assist in verifying that Rushmore is compliant with its own policies and procedures, as well as investor and regulatory requirements. A vendor-provided enterprise-wide governance, risk, and compliance system (GRC) monitors corrective action plans (CAPs) and management action plans (MAPs) identified by the various lines of defense, tracks policy and procedure approvals, and monitors other items. The company implemented a new software tool for testing within QC, compliance, and quality assurance (call monitoring) so there is system commonality when reviewing and grading loan/staff performance.

Various committees affecting IA, compliance, QC, information technology (IT), and change management meet on a scheduled basis to discuss any concerns. The QC, IA, and compliance teams report findings and action plans to the ERM and audit committees, which meet monthly and quarterly, respectively.

A servicing operations support (SOS) department, with dedicated managers handling different functions, is responsible for policies/procedures, letter/forms management, certain change management functions (e.g., tracking/reporting), and the internal QA function.

The legal department helps the organization with litigation management and provides legal support, advice, and guidance on existing regulations among its many functions.

Policies and procedures 

Rushmore exhibits sound oversight of its policies and procedures. We considered the following characteristics and controls in our analysis:

  • The well-written manuals include screen prints, a glossary of frequently used terms, and hyperlinks to related material.
  • Staff work with the business unit to draft changes, monitor, and ensure that all approvals are received and input them into the system.
  • Email notifications of changes are sent to the applicable parties.
  • Policies and procedures are recertified annually.

Any changes to policies or procedures, letters, etc., must be submitted to the change management committee for approval, as well as the enterprise risk committee, among other parties. The SOS performs semiannual reviews of any ancillary fees assessed to borrowers to validate adherence to regulatory and best practices in the industry. Additionally, all customer-facing letters and forms, including revisions, are archived in a proprietary database. Management initiated a two-year letter cycle review/recertification campaign that is expected to be completed by year-end 2022.

Quality assurance (and call monitoring) 

Rushmore's QA group performs first line of defense testing. Highlights are as follows:

  • Monthly testing, with grades of pass or fail.
  • Internal staff validate all fails and a random selection of passes. To establish a CAP, the tested item must have exceeded the threshold, have a borrower impact, or reflect a systemic failure.
  • The second and third lines of defense review the CAPs to see if there are any trends or areas requiring focus.
  • Results are reported monthly to management and quarterly scorecards detailing performance are produced.

A separate vendor along with internal staff are responsible for monitoring call center staff, which includes 10 calls per representative monthly. Two separate vendor staff in Manila provide additional offshore call monitoring beyond the standard monitoring for all call center staff. The compliance vice president receives the overall call results in addition to the required managers.

Compliance and quality control 

QC conducts monthly reviews affecting agency, Rushmore, and federal regulations/guidelines inclusive of any state-specific statutes. QC analysts who specialize in particular areas liaison with the business unit to address and assist in resolving any findings, among their other functions. Other characteristics of the QC plan are as follows:

  • There are individual issue ratings (high to low) and an overall ranking assigned to the results (strong to unsatisfactory).
  • Corrective action items require a MAP.
  • QC monitors the MAP monthly for resolutions and tests the MAP upon completion to validate remediation of the issue.

The compliance department, which is an independent second line of defense reporting to the audit committee of the board of directors, monitors for changes to applicable laws or regulations and notifies the company of same, manages the licensing and relationships with Rushmore's regulators, is responsible for the company's compliance training, and conducts the servicing organization's compliance monitoring and testing, among other duties. Compliance highlights include:

  • A dedicated individual who oversees the regulatory change management process and validates that any revisions to practices were completed;
  • An ongoing monitoring and testing plan that reviews applicable federal and state regulations, and manages any exceptions thereto, including required remediation efforts, if any;
  • Coordinate and respond to regulatory exams;
  • Design an annual compliance training curriculum so that every employee is aware of and understands their compliance responsibilities particular to the company and their job function; and
  • Involved in all change processes throughout Rushmore.

Internal and external audits 

The department reports to the audit committee. Audits affecting technology and information security remain outsourced. Attributes and controls for IA are as follows:

  • IA assigns ratings to each audit and issue.
  • The audit plan/schedule is annually approved by the executive and audit committees.
  • IA reviews all high-risk departments on an annual basis and moderate-risk departments biannually.
  • IA reviews the CAPs and MAPs of other areas.

A review of 2020 IA and QC reports found that any findings were properly resolved and validated or have been scheduled for future remediation. There were no issues cited in the 2020 Regulation AB or USAP statement, and its 2020 SSAE 18 report reflected no material findings. Rushmore indicated there were no significant findings from any client reviews or state examinations and that GNMA operational reviews completed in 2020 did not disclose any material issues.

Complaint management

The legal department tracks and monitors the status of all complaints received by Rushmore via a centralized database. Attributes of the process include the following:

  • Complaints are reviewed by a paralegal who drafts the response upon completion of the research.
  • A senior paralegal reviews the proposed response to validate the results and language.
  • Complaint reporting occurs weekly versus monthly.
  • Report improvements reflect segmentation by root cause, business unit, investor source, etc., and a new repeat complaint report.
  • Executive escalations require borrower contact within 24 hours and a goal of resolution within five days.
  • Verbal complaints that cannot be resolved by telephone are forwarded to a dedicated complaint mailbox for further research.

Rushmore also established a consumer ombudsman office, reporting to the general counsel, which reviews calls, complaints, and other items to ascertain if the response addressed the customer's issues and was concise in its resolution specifics. Initially, the focus has been on escalated calls and repeat complaints. An outside vendor reviewed Rushmore's complaint process and management indicated they plan to implement many of its recommendations, which include establishing a centralized root cause team, creating a tier classification, etc.

Vendor management

Reporting to the general counsel, vendor management (VM) facilitates the procurement and onboarding of vendors, and measures performance. Vendors are risk-tiered into four categories based on responses to VM's due diligence questionnaire and a review of required documents. VM performs annual due diligence reviews of vendors rated Tier 1 (e.g., all offshore vendors) and Tier 2 and biennial reviews for Tier 3 and 4 vendors. All documentation, reporting, and monitoring are input into a centralized system. Attributes include:

  • An augmented vendor questionnaire with additional compliance, learning and development, and QC items for certain Tier 1 service providers;
  • Quarterly scorecards generated on Tier 1 vendors, with Tier 2 receiving semiannual scorecards;
  • Separate scorecards generated by business units on a monthly or quarterly basis;
  • An annual due diligence and recertification process;
  • Monthly meetings with the business unit discussing performance and incidents;
  • Monthly reporting to the ERM committee and quarterly to the audit committee; and
  • Quarterly testing of the VM plan by QC.

Offshore vendors are also subject to weekly and monthly calls discussing their performance.

VM is responsible for the oversight of its default attorneys. An attorney network management committee (ANMC) meets at least quarterly to rate and review, and approve or deny the applicant. The firm tier ratings are determined by the ANMC. Other highlights include the following:

  • A dedicated person obtains annual recertification information from each firm.
  • Rushmore performs onsite reviews of its top 10 firms annually, and most of the remaining firms semiannually.
  • The business unit produces monthly scorecards and performs regular reviews of certain select entities.
  • The department uses a financial health tool to assess the firm's financial state.
Insurance and legal proceedings

The company has represented that its directors and officers, as well as its errors and omissions insurance coverage, are in line with the requirements of its portfolio size. As of the date of the review, there were no material servicing-related pending litigation items.

Loan Administration – Primary And Special

The loan administration subrankings are ABOVE AVERAGE for primary and special servicing.

Two offshore vendors assist with administrative-facing tasks of which many functions pertain to testing, producing exception reports, or reviewing data. Additional functions expanded to Manila include payoff processing for current loans and addressing late charge exceptions. Manila handles borrower communications related to inbound customer service and collections. A non-affiliated person based in Manila helps oversee the offshore vendor.

Rushmore has a separate dedicated team to liaise with its clients.

In response to the COVID-19 pandemic, management successfully transitioned its staff to remote work. It hired an additional 25 customer service and collections staff as well as added 80 vendor employees both offshore/onshore to assist with customer communications and inquiries. Management indicated they implemented all COVID-19 impacted programs per any federal and/or state requirements. They also made various technology changes (e.g., website, telephony system) to assist in borrower communications.

New-loan boarding

Rushmore boarded more than 900 transfers in 2020, representing almost 120,000 loans with $29.3 billion in unpaid principal balance (UPB). Through February 2021, additional boardings accounted for 147 transfers, representing more than 28,000 accounts. Rushmore is an approved FNMA servicer of eNotes. Almost 100% of accounts are boarded electronically.

New loan set-up features include:

  • A 31% document-to-system check that is less than peers, although management indicated the lower rate is due to the company boarding mainly newly originated or performing accounts, so they sample a smaller percentage of the total population;
  • A 100% document-to-data audit on all NPLs/RPLs, modifications, and adjustable-rate loans;
  • Newly formed separate teams that handle flow and bulk acquisitions;
  • A review of portfolios subject to a regulatory consent order or other actions by compliance and legal to ascertain the servicing requirements;
  • Optical character recognition for its document-to-system reviews;
  • A dedicated resource to track inflight loss mitigation accounts and a coordinator for each applicable department; and
  • A proprietary collateral system for tracking the status of missing documents.

Management integrated its imaging platform with the website and mobile application so customers can more easily view documents.

Payment processing

Rushmore's cash processing department operates with good controls that minimize risk of loss from fraud or misplaced checks. Staff average 19 years of experience. Cash processing features and improvements include:

  • An approximate 87% electronic processing rate, which is less than other servicers we follow;
  • An online check decisioning tool that allows staff to expediently research and remediate lockbox payment rejects;
  • A proprietary cashiering advice system that routes complex payments to the appropriate department for further instructions; and
  • Puerto Rico borrowers can make payments at a local First Bank branch that autopost to the system or make noncash payments at Rushmore's San Juan office.
Investor reporting

Rushmore services loans for various investors (see table 3), with an appropriate segregation of duties between reporting, remitting, and reconciliation functions. We factored the following risk management procedures and metrics into our analysis:

  • Staff average more than seven years of experience.
  • The electronic reporting and remitting rate is 100%.
  • There were no aged open items.
  • A new proprietary advance oversight tool allows the department better tracking of advances along with improved reporting.
  • All reports and reconciliations require senior management review and approval.
  • Departmental turnover was 21%, which was higher than peers', but represented only a small number of staff so we do not consider it material.

Table 3

Portfolio Breakdown By Investor (%)
Investor Prime Special
Fannie Mae 23.48 0.00
Freddie Mac 15.18 0.00
Ginnie Mae 56.79 0.00
Mortgage-backed securities investor 0.00 0.00
Portfolio 0.46 0.00
Other investor 4.09 100.00
Total 100.00 100.00
Escrow administration

Approximately 93% of the primary and 87% of the special portfolio have escrow accounts. The department uses separate tax and insurance vendors through a complete outsourcing relationship inclusive of customer service calls. Rushmore implemented a digital tax platform with its vendor that integrates the servicing system with the vendor's, which has reduced the number of calls, payment exceptions, and research requests. Escrow management processes and statistics are as follows:

  • Nonreimbursable tax penalties amounted to $0.03 per loan, which is better than relevant peers.
  • Lender-placed insurance and cancellation rates are satisfactory, in our view.
  • Staff in each department monitor 50 calls per vendor.
  • The tax and insurance vendors' abandonment rates are 0.75% and 1.20%, respectively, with a nine-second and 24-second average speed of answer (ASA), respectively. We consider these to be solid metrics.
  • A single point of contact is now in place for loss draft situations.
  • Vendors are subject to frequent calls and meetings to discuss performance.
  • Departmental turnover of 17% was higher than relevant peers', though this represents only a small amount of staff, so we do not consider it material.
Mortgage reconveyance

Lien-release documents are prepared by internal staff and then submitted to a vendor. The vendor forwards the documents for recording and tracks them to validate that they are recorded. There have not been any penalties assessed for noncompliance.

Special loans administration

For adjustable-rate loans, personnel perform dual verifications to confirm that the indices are correctly input into the system. Loans affected by the Servicemembers Civil Relief Act undergo a quarterly analysis, and there are multiple reviews performed before foreclosure referral or sale to confirm the borrower is not affected by these regulations.

Customer service

Agents handle accounts up to the 16th day of delinquency. The new proprietary website and mobile application allow the customer better options and features when communicating with the company. This includes additional self-help videos, an updated insurance claims page for natural disasters, an improved messaging bar announcing any important topics (e.g., severe weather and FEMA alerts, 1098 tax statement information, etc.), secure messaging options, and a personalized banner soliciting automated clearing house and/or paperless enrollment. Attributes and metrics are as follows:

  • There is no management turnover and a 22% staff turnover rate, both of which are better than peers.
  • A customer experience team was created to examine items related to customer communications affecting project management, customer feedback analysis, and improving self-service options.
  • The offshore vendor handled 62% of call volume, with a satisfactory 1.86% abandonment rate and a 58-second ASA.
  • The 36% IVR capture rate is much less than similar servicers.
  • All calls are recorded and the system provides screen capture.
  • Website registrations comprise 87%.
  • Satisfaction surveys were implemented in fourth-quarter 2019.
  • The first-call resolution rate is 81%, which is competitive with peers'.

Borrowers can use the chat feature function up to 59 days delinquent. Management scores 10 chats monthly per agent. Statistics reflected a 0.12% chat abandonment rate with a 15-second average speed of chat pickup.

Borrowers in Puerto Rico have the option of going to Rushmore's office from a customer service or default perspective to speak with an agent, which is a common practice on the island.

Rushmore's abandonment rates throughout the call center were better than comparable peers'. Customer service ASA was also better than peers', while collection and loss mitigation ASAs were comparable to peers' (see table 4).

Table 4

Average Speed Of Answer And Abandonment Rate
Average speed of answer (seconds) Abandonment rate (%)
Customer service 63.95 2.40
Collection 47.00 1.42
Loss mitigation 111.98 4.94
Default management

Rushmore risk grades its accounts when determining collection contact efforts. The department's model is applied on loans up to 29 days delinquent and analyzes two variables: loan- and asset-specific data. Approximately 61% of collection call volume is addressed by the offshore vendor.

Delinquency rates for the prime and special portfolio have increased due to the COVID-19 pandemic (see tables 5 and 6).

Table 5

Prime Delinquency Rates
Year Total delinquency (%) 30-59 days delinquency (%) 60-89 days delinquency (%) 90+ days delinquency (%) Bankruptcy (%) Foreclosure (%) Real estate-owned (no.)
Dec. 31, 2020 7.84 1.98 0.95 4.91 0.78 0.59 144
Dec. 31, 2019 4.99 3.05 0.92 1.02 0.91 0.96 280
Dec. 31, 2018 5.93 3.43 1.18 1.32 0.98 0.93 192
Dec. 31, 2017 2.47 1.86 0.34 0.27 0.09 0.10 18
Dec. 31, 2016 1.24 0.83 0.19 0.22 0.10 0.14 3

Table 6

Special Delinquency Rates
Year Total delinquency (%) 30-59 days delinquency (%) 60-89 days delinquency (%) 90+ days delinquency (%) Bankruptcy (%) Foreclosure (%) Real estate-owned (no.)
Dec. 31, 2020 12.49 4.39 1.95 6.15 3.19 7.74 1,234
Dec. 31, 2019 10.21 5.43 2.03 2.75 3.99 8.08 3,985
Dec. 31, 2018 10.20 5.28 1.71 3.21 4.26 8.95 6,863
Dec. 31, 2017 15.30 6.49 2.39 6.42 6.65 17.72 7,048
Dec. 31, 2016 12.04 4.64 1.86 5.54 9.41 33.38 6,241

Experience and tenure levels compared well with Rushmore's peers' (see table 7). Turnover rates were generally similar in most areas, although management turnover was higher. Management explained this was due to the low number of managers in a particular area, which resulted in increased turnover metrics; however, very few personnel left the company. Thus, we do not consider it to be material.

Table 7

Experience And Tenure
Management Staff
Avg. industry experience (years) Avg. present employer experience (years) Turnover rate (%) Avg. industry experience (years) Avg. present employer experience (years) Turnover rate (%)
Collection 19.00 3.57 14.00 8.00 2.00 15.00
Loss mitigation 14.00 5.78 14.29 10.00 4.44 8.62
Foreclosure 29.00 4.00 11.11 16.00 3.45 11.63
Bankruptcy 31.00 4.00 33.00 12.00 3.00 11.00
Real estate-owned 14.00 6.00 0.00 17.00 3.63 7.14
Collections

The department's collection methodology, metrics, and highlights include the following:

  • The IVR can accept up to three delinquent payments provided the customer brings the account current regardless of the delinquency.
  • There is a quarterly refresh of FICO scores on MSR loans.
  • The risk model was updated to further improve efficiencies.
  • A proprietary best time to call model assists with contact efforts and has been enhanced to review call patterns using a 12-month history versus the prior 90-day timeframe.
  • Promise-to-pay success rates are 72% and 69% for accounts 30 and 60 days delinquent, respectively, which are better when compared with other servicers we follow.

In Puerto Rico, Rushmore uses field collectors on latter-stage delinquent accounts and when there has been no successful borrower contact. This is a common practice on the island.

Loss mitigation

Rushmore has an appropriately proactive loss mitigation philosophy. Repayment and forbearance plans represent a significant amount of completed loss mitigation alternatives (see table 8).

Table 8

Loss Mitigation Breakdown (%)
Resolution type Prime Special
Deed-in-lieu 0.04 0.62
Short sale 0.47 1.88
Repayment plan 19.83 4.71
Modification 16.86 7.16
Forbearance plan 60.31 81.20
Other 2.49 4.43
Total 100.00 100.00

The department changed its structure so now there are solicitors (i.e., the single point of contact [SPOC] who addresses inbound/outbound calls) and closers (i.e., those who follow up on completed packages and retain the file until workout completion). A dedicated individual monitors in-flight modification during the transfer process. Controls and metrics are listed below:

  • The vendor's modification tool is fully integrated with ReaLM and includes an automated waterfall for all investor types.
  • Field associates conduct personalized contact when necessary and attend mediation and litigation hearings.
  • All modification denials receive a second review, while approvals receive a sampling. All denial letters are reviewed to confirm the accuracy of the information.
  • There is a 100% post-modification review no later than 60 days after input to verify the accuracy of the data.
  • The department leverages email to inform borrowers of workout options and on certain targeted accounts, requesting they contact the company.

Management made several enhancements to its government servicing capabilities, which include:

  • A customized vendor claims and loss analysis system;
  • A workflow and tracking system that identifies potential issues in loss mitigation so staff can prioritize timelines and reduce risk (which is being introduced shortly to other areas);
  • A corporate advance scorecard;
  • Adding a second claims vendor;
  • Implementing a default tracker to scrutinize legal timelines for compliance; and
  • Enhancing ReaLM for servicing FHA accounts.
Foreclosure and bankruptcy

Rushmore's prudent foreclosure practices include the following practices:

  • A foreclosure workgroup discusses and reviews each proposed legal referral to confirm it meets eligibility requirements.
  • All foreclosure approvals now receive electronic confirmation versus the prior manual process.
  • There are several checks to confirm Servicemembers Civil Relief Act eligibility prior to sale.
  • There is frequent contact with attorneys through calls and onsite meetings to discuss issues, along with performance grading via a monthly scorecard.
  • Authorized staff and notaries confirm that documents were reviewed and prepared properly.
  • There were minimal curtailed mortgage insurance claims.
  • An internal loss analysis department was established.
  • A separate litigation team focuses on litigious matters.
  • For Puerto Rico accounts, the department generally refers foreclosures to the federal court because of its reduced timelines.

Rushmore's bankruptcy area has the following attributes:

  • It electronically obtains and monitors bankruptcy actions.
  • The proof of claim is prepared and filed internally and subject to a secondary review before forwarding to the attorney.
  • Motions for relief filings include language offering loss mitigation.
  • There have not been any rejected proofs of claim.
REO

Rushmore performs the administrative processes, while Dakota handles the asset marketing and closing of the sale. The Puerto Rico market has certain nuances, such as an eviction must be completed even if the property is vacant and a court order is required for property preservation. The company noted the following statistics and controls in its REO process:

  • The REO system electronically updates ReaLM, if applicable, so investors can view the information.
  • Offshore staff perform a quality review of property inspections conducted by the listing agent.
  • Financial incentives are used to encourage the occupant to vacate the premises.
  • Dakota prepares the marketing plan.
  • Agents provide monthly status reports and are assigned a performance grade.
  • The average marketing time for specially serviced assets is 225 days, and gross and net proceeds to market value average 105% and 91%, respectively.
  • The special serviced loss severity averages 71%.

Financial Position

The financial position is SUFFICIENT.

Related Research

This report does not constitute a rating action.

Servicer Analyst:Steven L Frie, New York + 1 (212) 438 2458;
steven.frie@spglobal.com
Secondary Contact:Leigh Stafford McLean, Farmers Branch + 1 (214) 765 5867;
leigh.stafford@spglobal.com
Analytical Manager:Robert J Radziul, New York + 1 (212) 438 1051;
robert.radziul@spglobal.com

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