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Fitch Ratings for Manufactured Housing Servicer

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Fitch Ratings, a credit rating agency, released its affirmation of U.S. servicer ratings for Cascade Financial, a residential mortgage loan origination and servicing company.

Cascade Financial Services (Cascade) was assigned a primary Manufactured Housing (MH) specialty servicing rating of ‘RPS3-‘; Outlook Stable. Cascade is also the only MH-focused servicer rated by Fitch. The affirmed ratings are reflective of the company’s modest but established position within the MH sector and recent portfolio growth, its experienced management team, adequate risk control framework and technology upgrades, Fitch said in its statement. It also took into account the company’s financial condition.

The release also pointed out that MH accounted for approximately 10 percent of new homes in 2018 as it makes up a meaningful part of residential housing in the U.S. Fannie Mae and Freddie Mac have recently introduced MH products and programs, Fitch indicated. 

The servicer rating positions Cascade for potential involvement in rated RMBS. Fitch last rated a new issuance of MH in 2008. Cascade was founded in 1999 by industry veterans George Dover and Cody Pearce. It is licensed in 48 states and headquartered in Arizona. The company initially offered financing options to buyers of MH. In 2007 Cascade became a GNMA issuer and established its servicing department for the loans they originated. Cascade has focused on hiring management and staff experienced in MH as it grows its portfolio.

In August 2016, the company was acquired by affiliates of Centerbridge Partners, which drove the development of new loan products in addition to providing a full suite of loan services to existing borrowers. Most recently in 2018, the company began expanding its third party subservicing operations. The servicing portfolio had 18,680 loans as of Dec. 31, 2018, which totaled $1.3 billion in unpaid principal balance. While still relatively small, Cascade anticipates meaningful growth in 2019 from additional third party servicing of seasoned MH product and its own retail originations. Cascade has serviced its own retail originations since 2007.  

“Loan originations differ in underwriting standards for chattel (home only), land-home, FHA, and community chattel financing. While this product can be challenging to originate and service the market has begun to focus on opportunities in this sector. Both Fannie Mae and Freddie Mac have recently introduced MH products and programs,” the report reads.

The servicing of manufactured homes can differ from typical site-built homes in that chattel loans are treated as personal property. Chattel loans are not restricted by the typical longer legal actions of a traditional residential mortgage. 


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