OREANDA-NEWS. Fitch Ratings has upgraded Charter Court Financial Services Limited's (Exact Mortgage Experts Limited - the trading name of the servicing entity) UK residential mortgage servicer ratings as follows:

UK Primary (Prime) Servicer Rating upgraded to 'RPS2-' from 'RPS3+'
UK Primary (Sub-prime) Servicer Rating upgraded to 'RPS2-' from 'RPS3+'
UK Special Servicer Rating upgraded to 'RSS2' from 'RSS2-'

The improved financial condition of Charter Court Financial Services helped drive the upgrades. Charter Court Financial Services, the parent company of Exact Mortgage Experts (Exact), was awarded a banking licence on 6 January 2015. In order to gain the banking licence the business has met the Basel III liquidity ratio requirements and undergone an intensive review by the Prudential Regulation Authority. Exact has made a net operating profit for each of the last three years.

The ratings reflect the high level of industry experience among Exact's senior management team. The stability of this group is demonstrated by the fact there have been no departures from the leadership team since Fitch's first review of the company in 2012.

The upgrade acknowledges the addition of an outsourced internal audit programme to an experienced third-party supplier, which further enhances the risk management framework of the business. The outsourced audit cycle is now in its second year and has completed eight audits to date. Fitch views positively the independent review of the company's processes.

Exact continues to focus on its staffing and training. The company views staff development as a key objective and operates a structured training and development programme that is run by a team with an average of 17 years industry experience. This team has delivered an average 86.3 training hours for each staff member compared with 61.5 hours last year. The level of training hours continues to rise each year and compares favourably with peers. The low staff turnover of 10.2% reflects this approach, which is viewed positively by Fitch.

The ratings also show Exact's continued development in technology. Exact has continued to refine its real time credit data tool provided by a credit reference agency. The telephony system has been upgraded to include an improved call recording platform and enhanced interactive voice response. Exact has also implemented a new document generator to improve document design and control.

The upgrade of the special servicing rating reflects overall improvements across the company's servicing capabilities which are now comparable with similarly rated peers. The upgrade also confirms Exact's improved performance in possession management. The average proceeds achieved versus the open market value for possessed properties has risen to 106.8% (102% in 2012). In conjunction with a reduced average time on the market of 100 days (148 in 2012), this means Exact compares very favourably with its peers.

At end December 2014, Exact's primary servicing portfolio comprised 18,596 loans with an outstanding principal balance of GBP1.7bn. Its special servicing portfolio comprised 12,977 loans with an outstanding principal balance of GBP1.6bn. This has grown from assets under management of GBP892m and GBP1.1bn, respectively, in December 2012. Fitch views this continued growth positively.

Fitch employed its global and UK servicer rating criteria in analysing the servicer's operations and financial condition, with the former criteria including a comparison of similar UK servicers as part of the review process.