S&P: Rushmore Loan Management Services LLC Residential Special Servicer Ranking Affirmed, Primary Raised; Outlooks Are Stable

S&P Global Ratings today affirmed its ABOVE AVERAGE ranking on Rushmore Loan Management Services LLC (Rushmore) as a residential special servicer. In addition, we also raised its residential primary (prime) ranking to ABOVE AVERAGE from AVERAGE. The outlooks are stable.

Our rankings reflect:Rushmore's proven ability to increase its special servicing and prime portfolios without any deterioration in overall performance. Good experience levels and low turnover rates. The hiring of many new personnel who bring extensive expertise to the operation. A better segmentation of functions and reporting lines. A well-designed internal control environment that consists of multiple auditing mechanisms, many of which have been strengthened through revised and augmented testing and/or reporting independence. Good complaint and vendor management controls and processes. A robust systems environment that underwent some enhancements. Generally competitive servicing metrics. Well-controlled default management practices. Newly hired experienced managers and staff, who might still be acclimating to their responsibilities and company culture. Certain elevated call center metrics, which management indicated was due to an increased volume of transfers. We raised our prime servicer ranking, and relative loan administration subranking, on Rushmore because management successfully increased the portfolio, thus evidencing a commitment to grow their product while leveraging the same experienced personnel, systems, and controls as their special servicing portfolio. Additionally, its prior special servicing acquisitions allowed Rushmore to gain prime loan servicing experience before fully venturing into the product. The systems environment has changed sufficiently to fully support performing loans and there have not been any material changes in data resulting from portfolio growth.

Since our prior review, Rushmore has made the following changes (see "Servicer Evaluation: Rushmore Loan Management Services LLC" published June 28, 2016):It opened two additional sites, one domestic and the other through an offshore vendor. It hired many new senior and middle managers to provide more oversight over the operation and because of portfolio growth. It divided its previously centralized law and compliance departments into two distinct areas, consolidated certain previously disparate functions into a unified group under the direction of a senior manager, and revised certain reporting lines. It implemented a governance, risk, and compliance system. It formed a dedicated quality assurance team to conduct first line of defense testing. The compliance department augmented its testing program. It is transitioning its internal audit program in-house in contrast to the current outsourcing arrangement. It centralized vendor management information to a repository. Puerto Rico staff began handling some functions on U. S. based accounts. It implemented a customer satisfaction survey. The outlooks for both rankings are stable. Rushmore has been successful in growing its portfolio and concurrently implementing improvements to its servicing operation as it continues to expand its infrastructure. Rushmore should remain a highly competent residential special and prime servicer.

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