Fitch Ratings has affirmed
RATING ACTIONS
Entity / Debt
Rating
Prior
Community Loan Servicing, LLC CMBS
CMBS Special Servicer
CSS3+
Affirmed
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Key Rating Drivers
The affirmation of the rating reflects CLS's experienced servicing and asset management staff, the platform's stability during a year of transition given the acquisition of the residential servicing platform by
Bayview Asset Management's (BAM), CLS's parent company, asset management business was established in 1993, and the company has more than 28 years of experience in purchasing, managing and servicing residential and commercial mortgage loans. Servicing plays a key role in supporting the CRE investment activities of BAM. As of
CLS continues to act as special servicer for its large and small balance commercial loans, and retained all critical commercial servicing infrastructure and personnel. The sale was partly driven by CLS's intention to focus on core commercial servicing competencies and to further grow the commercial portfolio in coming years. With the recent sale, CLS has noted that it does not plan to further spin off any of its operational functions in the near term.
Aggregate turnover for the year was 12%, down from 29% at the time of last review and 19% in 2020. Fitch notes that three of the company's five departures were senior management departures related to the
Concurrently, CLS has increased its commercial servicing platform headcount to 58, up from 29 at the time of last review. Of the 36 new team members, 27 have been with CLS for longer than a year, having joined the commercial servicing function through internal transfers related to the
Fitch notes that CLS maintains an experienced servicing employee base as senior and middle managers average 26 years of experience and 16 years of company tenure, while staff average 18 years of experience and 10 years of tenure at CLS, which are high compared to those of other Fitch-rated servicers. The company also maintains robust asset management resources, with 10 asset managers averaging 22 years of experience and 16 years' tenure with backgrounds in construction loans, development, lending and workouts.
CLS maintains a well-established internal control environment primarily through active employee oversight, including management's use of system exception reporting and quarterly monitoring of employee key performance indicators, in addition to dedicated compliance and internal audit functions. CLS continues the use of robotic process automation and bot technology along with application programming interfaces to perform previously manual sampling for quality control testing. The company's commercial servicing team underwent a partial servicing audit completed in 2022, resulting in no material findings.
CLS's commercial loan workout technology infrastructure is more limited compared to that of other Fitch-rated commercial special servicers, reflecting the historical focus on residential loans. The main asset management system serves as a loan tracking system with no financial analysis capabilities, and a proprietary net present value application provides for some automation of asset management functions but requires manual intervention outside the system.
In early 2023, CLS plans to implement
As of
Additional information is available on www.fitchratings.com
PARTICIPATION STATUS
The rated entity (and/or its agents) or, in the case of structured finance, one or more of the transaction parties participated in the rating process except that the following issuer(s), if any, did not participate in the rating process, or provide additional information, beyond the issuer's available public disclosure.
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