Fitch Takes Negative Outlook on Fairbanks Servicer Ratings.

Fitch has revised its rating watch status on Fairbanks Capital Corp.'s loan servicing operation from "evolving" to "negative" after taking issue with a change in the way Fairbanks determines property values.

Fairbanks, which services the nation's largest portfolio of subprime mortgage loans, is currently rated "RPS3-minus" for subprime and home equity loan servicing and "RPS3" for alt-A and "RSS3" for special servicing.

Fitch Ratings said the rating actions are the result of its concern over the procedural changes that Fairbanks has recently implemented in order to streamline the process regarding the reconciliation of broker price opinion values.

BPOs of a home value that fail logic test thresholds are referred to its appraisal review department for reconciliation.

Fitch also said the change in the status is made pending its determination of the impact of recent changes Fairbanks has made to its procedures regarding the reconciliation of property values used in its net present value model.

The NPV model determines the best execution for loss mitigation initiatives.

Because of a backlog of BPOs that required reconciliation, Fairbanks changed its criteria for thresholds to determine which cases needed a review appraisal, according to Fitch. As a result, a significant number of BPOs were not longer required to be reconciled.