OREANDA-NEWS. Fitch Ratings has affirmed Hypocasso B. V.'s Special Servicer Rating at 'RSS2'.

Hypocasso is a Netherlands-based residential special mortgage servicer, 100% owned by Stater Participations B. V. (Stater; RPS1-). Stater is 100% owned by ABN AMRO (A+/Stable) and the rating takes into consideration this financial support. Hypocasso remains profitable year-on-year. Revenues have increased significantly while total cost to service has reduced in the three years from 2012.

Hypocasso was established in 2009. The affirmation reflects its continued servicing experience and stable senior management team. The senior management team had an average of four years company tenure and 21 years' industry experience as of 31 December 2015, which compares well with similar rated peers. In Fitch's view, the improved stability at this level since the current CEO was appointed in 2013 provides Hypocasso with clear direction to meet its business objectives of continued improvement and business growth.

The rating also reflects the relationship with Stater, which provides a number of support functions to the servicer such as internal audit, investor reporting and IT support. Hypocasso is subject to Stater's strong risk and compliance framework and robust policies and procedure, which are easily accessible to employees. Hypocasso is part of Stater's robust business continuity and disaster recovery plans, which Fitch considers to be appropriate.

Hypocasso is committed to staff development and hired its own in-house training expert in 2015 to focus on its well-defined training plan. The average number of recorded training hours per employee, over a 12 month period, increased to 385 hours end-December 2015 from 245 hours as of end-June 2014.

Since the last review, Hypocasso has introduced a new training and development portal for employees. Hypocasso uses a nine grid tool to identify top talent and rising stars within its business. The introduction of the Hypocasso leadership programme, since the last review, enables the servicer to develop the identified high potential individuals to progress within the business. In Fitch's view, this has improved Hypocasso's succession planning. There were 19 internal advancements in the 12 month to end-December 2015 (June 2014: two).

Annualised staff turnover has reduced to 25% as of December 2015 from 28.4% as of June 2014.The ratio remains higher than the averages across rated peers. Fitch notes that this figure includes contract staff, hired to complete short-term client projects, and interim employees while a permanent member of staff is being recruited.

Hypocasso continues to enhance its servicing capabilities. In 2016 a new MESIS tool was introduced to analyse borrower behaviour and establish the most appropriate solution to their circumstances. In Fitch's view, this new tool improves Hypocasso's ability to analyse borrower circumstances and assess the appropriate resolution by providing a structured and standardised workflow. Hypocasso continues to offer a budget coaching service and act promptly to contact borrowers in arrears.

Property sale performance has improved. The average sales proceeds achieved by estate agents versus original market value was 129.5% for the 12 months to end December 2015 (123.6% end - June 2014). The average proceeds for auction sales were 110.3% (101% end - June 2014). This compares well with peers.

Fitch used its servicer rating criteria to analyse the servicer's operations and financial condition, including a comparison against similar Dutch servicers as part of the review process. The analysis is based on information provided to Fitch by Hypocasso.

As of 31 December 2015, Hypocasso's residential servicing portfolio totalled EUR1.437bn (30 June 2014: EUR 2.22bn) consisting of 12,874 loans (30 June 2014: 13,228 loans).