Bond credit rating organization Moody’s Investment Service has affirmed its “above-average” rating for the reverse mortgage servicing performance of Celink, current holder of the U.S. Department of Housing and Urban Development (HUD)’s Home Equity Conversion Mortgage (HECM) servicing contract and a HECM subservicer for several major lenders.
The Moody’s assessment of “SQ2” is based on Celink’s “above average” servicing abilities and “average” servicing stability. The SQ represents Moody’s view of a servicer’s ability to prevent or mitigate asset pool losses across changing markets. The assessment scale ranges from SQ1 (strong) to SQ5 (weak).
“Celink is proud of Moody’s recognition of the quality we are delivering to both reverse mortgage borrowers and our clients,” said Marion McDougall, CEO of Celink in a statement. “We have consistently pursued and invested in providing the best experience for our clients and their borrowers. We have made great technological strides. These advancements, coupled with a continued focus on high-touch borrower interaction, has been the real needle mover.”
Moody’s assessed Celink on four main criteria: its loan administration abilities; its monitoring of maturity events; its enforcement activities for foreclosure, REO and claims processing; and its servicing stability.
For loan administration and monitoring of maturity events, Moody’s asses Celink as “above average,” noting that its website and interactive voice response activities in its call centers have been improved since the last time the firm assessed Celink. Moody’s also said Celink is actively monitoring the transition away from the London Interbank Offered Rate (LIBOR) index for potential impacts on its portfolio.
The company also has comprehensive maturity event validation protocols in place, “effectively” utilizing vendors for tax and insurance tracking and monitoring, Moody’s said. The implementation of using electronic signing for annual occupancy certifications required for HECM loans has made the process easier for its clients, Moody’s added.
Celink also maintains a “comprehensive” pre-foreclosure file review process to comply with investor and regulatory requirements, with specialized loan tracking systems and a network for communication with its network of attorneys. Moody’s also noted Celink’s implementation of assistance for seniors who qualify for assistance under the Homeowners Assistance Fund (HAF) put into place with the passage of the American Rescue Plan Act of 2021.
Moody’s assesses Celink’s servicing stability as “average,” saying that the management team’s 25 years of experience is a benefit. However, the reverse mortgage product itself is deemed a risk factor.
“Celink’s strong market share and consistent performance is offset by its private ownership and the regulatory and reputational risk inherent with the reverse mortgage product,” Moody’s said in its assessment. “The company continues to invest in technology and automation throughout the servicing organization.”
Celink is the largest subservicer of reverse mortgage loans in the United States, with a portfolio consisting of approximately 271,491 loans according to Moody’s. In December, Celink assumed loan servicing duties for HECM loans sponsored by the Federal Housing Administration (FHA), after previously winning the contract earlier in 2022.
Industry response to the news of Celink gaining the servicing contract from HUD was largely positive.