Operational Risk Assessment Rankings

Origination and servicing quality can affect transactional performance from a delinquency, default, and recovery perspective and, consequently, may affect the timely and ultimate repayment of rated securities. Rankings provide an independent, objective and thorough analysis that is based on quantitative and qualitative considerations relevant to the company and its asset class.

Morningstar DBRS assigns public ORA rankings to servicers and originators who participate in securitizations. Morningstar DBRS may also rank servicers that participate in non-securitized transactions, such as servicing mortgage loan portfolios on behalf of a parent company or other third-party investors. Accordingly, these rankings take into consideration a servicer’s abilities and duties acting in such capacities.

A four-level numerical scale is applied after analyzing quantitative and qualitative data obtained through an in-depth review process. Rankings may also include a Trend to characterize the view of their direction over the next year. All rankings are subject to surveillance, which may lead to an affirmation or change, a revised Trend, Under Review placement, or withdrawal.

The ORA ranking focuses foremost on a company’s operational quality and overall effectiveness. ORA rankings are not credit ratings and although financial condition is a consideration, its relative importance is such that a servicer or originator ranking should never be considered as a proxy of its creditworthiness.

Morningstar DBRS’s ORA methodologies for North American Commercial Mortgage Servicer Rankings, U.S. Residential Mortgage Servicer Rankings, U.S. Residential Mortgage Originator Rankings, and Canadian Residential Mortgage Servicer Rankings can be found in the Methodologies and Criteria section of the dbrs.morningstar.com website. The ORA ranking scale can be found in the Rating Scales section of the website or at this link.

Morningstar DBRS may also assign public Servicer Evaluations, at the servicer's request, which reflect the evaluation of the quality of the parties that conduct primary, master, and/or special servicing of residential mortgage loans that are typically expected to be securitized in a Canadian transaction that Morningstar DBRS is rating. Based on the results of an operational review, Morningstar DBRS will assign the servicer’s operation an evaluation of Superior, Good, Adequate, or Weak. Servicer Evaluations are not credit ratings. Morningstar DBRS’s Operational Risk Assessments for Canadian Structured Finance methodology can be found in the Methodologies and Criteria section of the website or at this link.