DBRS Releases Updated Methodology for North American Commercial Mortgage Servicer Evaluations

DBRS has today released its updated methodology for evaluating servicers in North American commercial mortgage-backed securities (CMBS) transactions. The existing methodology was reviewed and updated to provide insights into the current rationale behind DBRS’s operational risk reviews of CMBS servicers. This methodology updates and replaces the methodology “Commercial Mortgage Servicer Evaluations,” published in March 2011.

When rating a CMBS transaction, the capacity of the servicer is a key analytical consideration because servicing quality can affect the performance of the trust assets from a delinquency, default and recovery perspective, and consequently may affect the ultimate repayment of rated securities. Because of the importance of the servicing role, DBRS performs periodic on-site servicer reviews of master and special servicers in transactions it rates to gain understanding of each company’s servicing capabilities. A DBRS servicer evaluation incorporates assessments of the following eight criteria:

-- Company structure and management experience.
-- Asset administration, reporting and customer service.
-- Loss management.
-- Technology and systems.
-- Financial condition and outlook.
-- Staff and training.
-- Procedures and controls.
-- Outsourcing, offshoring and vendor arrangements.

The relative importance of each of the criteria varies depending on the servicing role -- primary, master or special.

The methodology providing DBRS’s processes and criteria is available by contacting us at info@dbrs.com.