NEW YORK (S&P Global Ratings) Nov. 20, 2023--Mr. Cooper--a subsidiary of parent company Mr. Cooper Group Inc.--is one of the largest home loan servicers in the U.S. Mr. Cooper acts as servicer in more than 450 of our rated U.S. residential mortgage-backed securities (RMBS) transactions and, in some instances, services 100% of the outstanding loans within our rated transactions.
According to Mr. Cooper's Form 8-K/A, published on Nov. 2, 2023 (and updated on Nov. 9, 2023), "On Oct. 31, 2023, the company determined that we had experienced a cybersecurity incident in which an unauthorized third party gained access to certain of our technology systems. Following detection of this incident, the company initiated response protocols that included deploying containment measures involving shutting down certain systems as a precautionary measure. We have notified law enforcement, regulatory authorities, and other stakeholders, and we are working with our existing cyber security firms and retained additional cybersecurity experts to oversee our actions. Due to these and other measures, we believe we have contained the cyber threat." On the same form, Mr. Cooper stated, "Because our systems were not accessible from November 1 through November 4, many customers were unable to make payments or access their accounts." On Nov. 15, 2023, Mr. Cooper provided updated information on its website (https://incident.mrcooperinfo.com/) concerning the incident.
Servicers of the structured finance transactions that we rate are typically responsible for collecting payments from borrowers and distributing those payments for the benefit of the securityholders. Disruptions in the servicer's ability to collect and process mortgage payments from borrowers have the potential to impact the distribution of cash and impair the servicer's ability to make timely interest and principal payments. However, U.S. RMBS transaction documents typically require servicers to advance delayed or delinquent payments of principal and interest. Moreover, most U.S. RMBS transactions involve an investment-grade "backup advancer" that is required to advance funds should the servicer be unable to do so.
Given these mitigating features and information available to us at this time, we do not expect the performance of our rated U.S. RMBS to be affected materially. However, we will continue to monitor the situation to determine what impact, if any, it will have on our U.S. RMBS ratings or on the rankings assigned to Mr. Cooper as a servicer.
- Servicer Evaluation: Mr. Cooper Master Servicing, June 23, 2022
- Servicer Evaluation: Mr. Cooper, June 16, 2022
This report does not constitute a rating action.
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