OREANDA-NEWS. Fitch Ratings has updated its structured finance servicer rating criteria report to remove the distinction between prime and subprime loans for the residential primary servicing activities carried out by servicers in EMEA. Fitch has therefore removed references to Residential Primary Servicer (prime) and Residential Primary Servicer (subprime) ratings from country-specific indices for the UK, Germany, Netherlands and Italy.

Information received by Fitch during the rating process demonstrates that servicers in EMEA do not distinguish between prime and subprime loans when carrying out servicing activities. In Fitch's view early arrears management, which is a key part of primary servicing, has become more proactive and better controlled since the global financial crisis. Driven by increasing regulatory requirements across the jurisdictions and developments in the credit information and technology available to servicers, all loans are subject to a more rigorous process.

For servicing activities outside EMEA, the early arrears category remains more heavily weighted within the Residential Primary Servicer (subprime) scoring matrix. This reflects Fitch's view that subprime loans require more intensive management at this stage than is considered appropriate for prime loans. The Residential Primary Servicer ratings include early arrears management up to 60 days.

The updated criteria will be applied to the relevant servicer ratings in EMEA, on an individual basis, as part of the regular servicer rating review process which is expected to be completed over the next 12 months.