""Moody's Investor Service"":http://www.moodys.com/ slashed credit ratings for ""Wells Fargo Home Mortgage"":https://www.wellsfargo.com/mortgage/ Thursday over concerns about deterioration in the quality of prime and subprime loans.[IMAGE]
The ratings agency downgraded the servicer from SQ1 to SQ2+. When reviewing residential mortgage servicers, Moody's rates SQ1 as strong and SQ5 as weak, with modifiers like pluses and minuses signifying their relative strength and weakness in each category.
Moody's cited the $25-billion servicer settlement as one reason why, saying that added public pressure over negotiations[COLUMN_BREAK]
substantially lengthened the foreclosure review and completion timeframes under Wells Fargo Home Mortgage.
Analysts attributed the downgrade to ""deterioration in loan performance... particularly in prime collections and timeline management.""
Signaling ongoing scrutiny by the ratings agency globally, Moody's also delivered ratings actions for 114 financial institutions in 16 eurozone countries, citing debt crises in Europe, challenges for the capital market, and deteriorating creditworthiness for sovereign debt.
Debt-saddled countries with downgraded banks included Italy (24), Spain (21), and France (10).
Moody's actions follow negative forecasts and downgrades by other Nationally Recognized Statistical Rating Organizations (NRSROs), namely ""Fitch Ratings"":http://www.fitchratings.com/web/en/dynamic/fitch-home.jsp and ""Standard & Poor's"":http://www.standardandpoors.com/SPComIPResolver.
Fitch said this week that as many as 20 U.S. banks could see $80 billion in total losses over the next three years, as their portfolios continue to sag under the weight of overexposure to the real estate market.
Analysts say that the NRSROs have increased their level of scrutiny and action against banks, servicers, and mortgage-backed securities in recent years in response to accusations of poor judgment from the financial crisis.