Federal mortgage: Fitch confirms Bellwether’s first commercial service rating
Fitch Ratings has confirmed the rating of the leading commercial mortgage manager of
Main scoring drivers
The affirmation of the First Service Rating reflects Bellwether’s continued demonstrated competence in senior commercial mortgage lending and its demonstrated commitment to supporting continued portfolio growth through hiring and continuous technology improvements. The rating also takes into account the highly experienced and permanent management team, the low staff turnover rate, the application of internal controls and the financial position.
Bellwether is a commercial real estate finance (CRE) company that acts as a lender and correspondent manager for life insurance companies, pension funds and CMBS lenders. It is also a direct lender for GSEs (
The company has grown considerably through various acquisitions and fundraising over the past few years to increase builds nationwide. The most recent acquisition took place in
Bellwether has increased its number of senior service employees to 86 service employees, strengthening the capacity of its asset management, insurance and loan operations teams. The overall staff turnover, historically very stable compared to other service providers rated Fitch, remained low at 6% in 2020.
Bellwether’s growing staff has five new employees to support the internalization of insurance compliance oversight by an external provider, with life insurance company-related loans initially transferred and all loans expected to be internalized d ‘by the end of 2021. Bellwether notes that the internalization of the insurance function is expected to provide a better experience for borrowers, improving both relationships with borrowers and providing additional in-house training opportunities.
The company continues to demonstrate its commitment to improving its IT infrastructure through several initiatives, including the reconfiguration of its main service registration system to a cloud-based architecture, the development of a new workflow management system based on Salesforce and extending the use of optical character recognition and artificial intelligence tools for the analysis of commercial property rental listings and insurance compliance forms.
Bellwether’s internal control environment consists of high-level policies and procedures, task tracking and reporting from the maintenance application, and oversight of the management of maintenance functions. A dedicated quality control and compliance team, independent of maintenance operations, performs quarterly reviews to confirm compliance with established policies and procedures. Although Bellwether does not maintain internal audit resources, it does take advantage of internal audits performed by its parent company,
However, Fitch noted that internal audits do not have a set timeline, and the scope of the service functions reviewed has been limited in recent years. The scarcity and limited scope of internal audits is partially mitigated by the robust scope of quarterly compliance reviews.
Bellwether’s service portfolio grew 36% by balance to reach
Life insurance loans make up the majority of the company’s service portfolio (54% depending on the number of loans), followed by
RATING ACTIONSENTITY/DEBT RATING PRIOR
? CMBS Main Service
CPS2+ Affirmed CPS2+
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Further information is available at www.fitchratings.com
The rated entity (and / or its agents) or, in the case of structured finance, one or more parties to the transaction participated in the rating process, except that the following issuer (s), if any, have not participated in the rating process, or provide additional information, beyond the publicly available information of the issuer.