Rationale

S&P Global Ratings' rankings on Caliber Home Loans Inc. (Caliber) are ABOVE AVERAGE as a residential mortgage loan primary, subprime, and special servicer. On March 10, 2021, we affirmed the rankings (see "Caliber Home Loans Inc. ABOVE AVERAGE Residential Mortgage Primary, Subprime, and Special Servicer Rankings Affirmed"). The outlook on the rankings is stable.

Our rankings reflect Caliber's:

• Continued investment in servicing technology to enhance the customer experience, increase efficiencies, and increase controls;
• Comprehensive vendor management processes and oversight;
• Executive and senior management team that exhibits good industry experience levels;
• Well-controlled core loan administration practices;
• Default management practices that support the servicing of subprime and special loans;
• Nimble response in dealing with the operational adjustments and regulatory requirements resulting from the COVID-19 pandemic; and
• Lack of a single governance, risk, and compliance tool of the kind used by peers.

Furthermore, Caliber maintains a disaster recovery and business continuity plan, including response procedures to address operational disruption as a result of a pandemic event. Caliber implemented its plan due to the COVID-19 pandemic. Management reported that there were no disruptions to the company's operations or data facilities.

Since our prior review (see "Servicer Evaluation: Caliber Home Loans Inc." published July 8, 2019), the following changes and/or developments have occurred. Caliber has:

• Hired a new senior vice president of business controls and shifted the department so it is directly under the chief loan administration officer rather than under loan servicing;
• Deployed interactive voice response and website self-service functionality for borrowers to apply for COVID-19 forbearance relief;
• Added sustainability testing for certain audit findings;
• Deployed workflow functionality within its vendor management software in addition to adding new vendor management scorecard software;
• Implemented an investor reporting workflow and reconciliation application; and
• Created a gold standard team in its call center for agent support.

The outlook on the rankings is stable. The servicer rankings and outlook reflect our view that Caliber maintains an appropriate level of management oversight and technology to efficiently and effectively service the portfolio with sufficient internal controls to identify and remediate issues. The loan administration and default areas continue to improve processes and technology while maintaining overall acceptable performance metrics.

In addition to conducting an on-site meeting with servicing management, our review includes current and historical Servicer Evaluation Analytical Methodology data through Dec. 31, 2020, as well as other supporting documentation provided by the company.

Profile

Caliber is wholly owned by Lone Star Funds, a private equity fund that has made significant investments in the residential mortgage sector. In 2008, Lone Star Funds purchased $9 billion in mortgage loans and the servicing operations of CIT Group Inc. In 2009, the platform was rebranded as Vericrest Financial Inc., and the company subsequently changed its name to Caliber Home Loans Inc. in June 2013. In August 2013, Caliber merged with its originations partner, Caliber Funding. The combined organization continues to be owned by Lone Star Funds and has its capital backing. Effective July 2018, Caliber sold Caliber Real Estate Services LLC to an affiliate (Hudson Homes).

Caliber originates mortgage loans through its retail, wholesale, correspondent, and consumer direct channels. It is an approved seller/servicer for Fannie Mae and Freddie Mac, an approved issuer for Ginnie Mae, and an approved servicer for the Federal Housing Administration, the Veterans Administration, and the U.S. Department of Agriculture. The company has servicing sites at its corporate headquarters in Coppell, Texas, as well as in Irving, Texas; San Diego, Calif.; and Oklahoma City.

Caliber's prime portfolio has remained relatively flat over the last few years while its subprime/special portfolio continues to decrease (see table 1). Since Caliber does not segregate its prime and subprime/special portfolios for servicing and it does not rely on specialists to manage the separate books, we do not feel the reduction in the subprime/special is a cause for concern. Caliber's portfolio is distributed across multiple states, which limits the concentration risk (see table 2).

Table 1

Table 2

Table 3

Management And Organization

The management and organization subrankings are ABOVE AVERAGE for primary, subprime, and special servicing.

Organizational structure, staff, and turnover

As of Dec. 31, 2020, Caliber had a loan servicing staff of 736, an increase of almost 19% from the prior year end. The increase in staff was focused in the call center (collections and customer service) and loss mitigation in response to COVID-19 pandemic-related call volumes and relief requests. We have noted in our prior three reports significant changes to Caliber's executive management team. Since our last review, Caliber has again changed personnel in the executive management team but not in numbers or positions that we believe cause disruption to the servicing operations. The CEO relinquished his title of president to the chief financial officer (CFO), and the deputy CFO was promoted to the CFO position. The senior vice president of escrow was placed in charge of the post-closing department when that function was moved to loan servicing in 2019, and an experienced escrow manager was promoted to replace her.

Caliber's management and staff turnover rates of less than 1% and approximately 3%, respectively, are lower than the rates reported by peers. Caliber's industry experience and tenure of its senior management team and middle management are all longer than those reported by peers.

Training

We believe Caliber has effective training programs, using computer-based training modules and classroom instruction to train new hires and enhance existing employees' skills and performance. Caliber uses a learning management system (LMS) to consolidate all online courses and materials, track employee training, and act as the repository for training records. Employees have training pushed to them through the LMS based on their role. Required training is assigned through the LMS quarterly. Employees are required to complete and pass annual Fair Debt Collection Practices Act training along with annual training for regulatory, compliance, human resource, and technology topics.

Since our last review, Caliber has revamped its new employee and new leader orientation programs to make the content more accessible. In March, as a result of shifting operations to a remote environment, all training was moved online. Training sessions focused on soft skills and empathy so staff had the tools and support to help customers deal with issues related to the COVID-19 pandemic.

Systems and technology

Caliber operates in an automated environment, with an effective combination of vendor and proprietary systems, which are scalable to effectively accommodate planned growth. The company continues to focus on technology enhancement projects to further streamline and automate servicing tasks across various loan administration functions.

Servicing system applications

The company uses a combination of third-party and proprietary systems for loan servicing. Caliber is in the process of moving to Black Knight's MSP servicing system from Sagent's LoanServ system. The new system is expected to be implemented in the third quarter of 2021. Caliber uses a suite of systems and applications to manage loan servicing, including:

• A call management system integrating the dialer and interactive voice response (IVR) systems;
• A loss mitigation underwriting system;
• A collateral management system;
• A real estate-owned (REO) asset management platform;
• A foreclosure and bankruptcy workflow system;
• A proprietary imaging platform; and
• A web-based short sale workflow system.

Business continuity and disaster recovery

Caliber has recovery and business continuity plans providing workflow and data backup. Continuity plans are reviewed and updated throughout the year. There are two hosted data centers, which are geographically dispersed: One is located in Carrolton, Texas, and the other, in Chandler, Ariz. Backups and data stores are replicated between locations. A disaster recovery exercise was completed on Oct. 20, 2020, and was deemed a success, with no critical issues identified.

Caliber maintains a disaster recovery and business continuity plan, including response procedures to address operational disruption as a result of a pandemic event. The company implemented its plan due to the COVID-19 pandemic. Management reported that there were no disruptions to the company's operations or data facilities.

Cybersecurity

Caliber's information and cybersecurity program includes practices and tools to prevent and monitor for threats, including that:

• Caliber partners with a third-party provider to manage its security program. This service includes continual real-time monitoring of production servers, firewalls, and network infrastructure by security analysts.
• Crisis management simulations are held twice per year.
• Annual third-party penetration testing is in place to monitor for threats and detect vulnerabilities.
• Caliber uses an email security system for threat prevention and secured messaging.
• It has industry-standard virus and malware detection systems and firewalls.
• A third party is kept on retainer for support in the event of an incident.
• Caliber carries out cyber awareness activities geared toward employees, such as annual training and quarterly phishing tests.

Internal controls

Caliber's enterprise risk management framework is comprised of three lines of defense along with multiple risk and oversight committees. Caliber utilizes various applications to track and manage its quality assurance, quality control, and audit testing. It does not utilize a single governance, risk, and compliance tool, the use of which we see as a common practice among mortgage servicers of this size.

Policies and procedures

In our opinion, Caliber maintains satisfactory policies and procedures through a dedicated team responsible for the production, ongoing maintenance, and distribution of policy and procedure manuals and bulletins. Caliber has a team of technical writers who are each aligned with specific business groups. Caliber utilizes an automated workflow system to manage the review and approval process for the creation of new policies and procedures, updates to existing policies and procedures, and annual certifications. The policy and procedure manuals and updates are electronically disseminated via the company's intranet, a summary of changes is shared with affected employees via email, and all changes are recorded within the policy and procedure revisions table. Policies and procedures are reviewed and attested to annually by operations management.

Quality assurance and call monitoring

Caliber's business units are the first line of defense. The various business units perform risk self-assessments as well as perform self-testing against policies and procedures. The business controls unit works with the business units to manage, test, and document controls. At the time of our last review, business controls was aligned under the servicing department. Since that review, a new senior vice president of business controls was hired, and she now reports directly to the chief loan administration officer. Key areas managed by business controls include:

• Regulatory change management;
• Risk-self assessment oversight;
• Post transactional testing;
• Monitoring the control point gauges used to monitor key risk and key performance indicators;
• Reviewing business unit management action plans for effectiveness and sustainability for risk mitigation; and
• Call monitoring.

Call monitoring is performed on a total of 10 calls per call center agent per month: five by the business controls team and five within the business. Scorecards are completed on all monitored calls.

Compliance and quality control

The second line of defense comprises quality control (QC) and compliance. The QC team reports to the chief risk officer and performs transactional testing against regulatory and investor requirements. Individual tests are performed monthly, quarterly, or annually. An annual risk assessment is performed to determine the review schedule. Since 2019, Caliber has increased the size of its QC team to 13 from eight to have the ability to launch testing on new practices and regulatory changes quickly.

While the QC group tests for compliance at a loan level, the compliance testing is done at a process level. The compliance group performs testing based on its annual compliance risk assessment to cover all regulatory items and reports its findings on a weekly and monthly basis. The compliance group will also perform ad hoc testing based on emerging risks or identified issues. An example of this is was the update to the 2020 compliance testing plan due to the enactment of the CARES act.

Internal and external audits

Caliber's third line of defense includes internal and external audits. Caliber's internal audit department is an independent business unit within the company and reports directly to the audit committee of the board of directors. Beginning in June of 2020, the audit overall assessment scale was modified to five levels from four. Audits receive an overall assessment, with those assessed as level one deemed highest priority and those at level five as informational. All audit remediation plans are tested by the internal audit department after implementation and prior to closure. Caliber added a test for level one and two findings where the remediation plan is not closed until a period of continuous monitoring and testing to validate the remediation is sustainable.

The audit department has increased its staff to 22 from 18 at the time of our last review and uses two vendors to support the audit program. The company feels that vendors add value not only for specialized audits, such as IT, but also to bring an industry perspective and view of potential issues.

We reviewed 13 audits completed in 2019 and 2020, four of which Caliber reported as having material findings. A review of the remediation plan shows all issues closed or on target for remediation by the second quarter of 2021. With the implementation of investor and regulatory requirements in response to the COVID-19 pandemic, Caliber's audit department redeployed staff to support the second line of defense. In June, an updated risk assessment and proposed audit plan was submitted, which focused on the pandemic-related risks, including remote access and cybersecurity as well as regulatory compliance.

A review of Caliber's 2019 Uniform Single Attestation Program (USAP) attestation report revealed no areas of non-compliance. As of February 2019, Caliber had no Regulation AB (RegAB) reportable assets. The RegAB report covering January 2019 showed no findings.

Complaint management

Caliber's customer advocacy and response team is responsible for the review of, response to, and tracking of complaints. At the beginning of 2020, this team was moved under the business controls group and expanded to include origination in addition to servicing complaints. A special team within this group handles executive complaints. As part of the complaint management process, Caliber performs a root-cause analysis of identified issues and assigns a risk level in line with the company risk assessment model. Responses to complaints go through a multi-point quality assurance process prior to being shipped. A monthly report is issued, and a meeting is held with management to review the complaint root-cause analysis and identify preventative solutions. Complaints are also reviewed as part of the compliance risk committee's quarterly meeting.

Caliber's average days for complaint acknowledgement and resolution are all better than that reported by peers. In our opinion, Caliber demonstrates that it effectively manages customer complaints and escalations.

Vendor management

Caliber's vendor management group works with the business units to manage the procurement, monitoring, and termination of third-party vendors. Within the team is a vendor auditor who oversees the initial and annual vendor audits, including security protocols, business continuity plans, and testing and financial reports.

Vendors are selected by the line of business, are approved by vendor management and operations senior management, and undergo a due diligence process. Vendors are grouped into one of four tiers based on risk. The primary functions of the vendor management program are:

• Vendor onboarding (risk assessment, due diligence review, and contract review);
• Performance management (performance oversight, policy monitoring, executive reporting, routine vendor reviews, and terminations); and
• Contract oversight (annual questionnaire, risk assessment, and annual documentation gathering and review).

Caliber uses software to track and monitor vendor contracts as well as vendor key performance indicators (KPIs), service-level agreements (SLAs), and improvement plans for any deficiencies identified. In January 2020, Caliber implemented a workflow tool within its vendor management software that provides greater visibility to the status of the vendor and the associated documents and oversight steps.

Since our prior review, Caliber modified the risk tiering of vendors so that it is now based at a contract level rather than at the vendor level. Management felt this gave greater visibility to the driver of the risk rating. Due diligence documentation requirements vary based on vendor tier level.

To verify adherence to established SLAs, Caliber monitors vendors through monthly scorecards that track adherence to KPIs and SLAs as well as the volume of work performed and the accuracy of that work. In November 2020, Caliber deployed vendor scorecard software. This system allows for better reporting and scorecard management. Business units now have the functionality to run the scorecard within the system and add meeting notes, and tasks are tied to the scorecard. Scorecards are reviewed by vendor management and senior management on a quarterly basis. Site visits and desk reviews are performed based on the risk tier of the vendor, including critical vendor classification and data center risk tiers

Caliber's attorney oversight group, default management department, and default vendor oversight areas manage the selection and approval of attorneys through the corresponding line of business.

Attorney oversight includes due diligence, loan-level reviews, performance scorecards, and managing performance improvement plans. Caliber has an attorney oversight committee that comprises executives from the legal, compliance, bankruptcy, and foreclosure departments. The committee meets quarterly to review attorney performance. With firms moving to working from home in response to the COVID-19 pandemic, Caliber's vendor management group worked with the chief information security officer to expand the cybersecurity requirements within the vendor contracts. Additionally, due to firm viability concerns as a result of foreclosure moratoriums, Caliber modified its firm financial review timing to quarterly from annually.

Overall, we believe Caliber has good methodologies in place for assessing its third-party vendors and maintains good oversight of its vendors.

Insurance and legal proceedings

Caliber has represented that its directors and officers as well as its errors and omissions insurance coverage is in line with the requirements of its portfolio size. As of the date of this report, there were no material servicing-related pending litigation items.

Loan Administration--Primary, Subprime, And Special

The loan administration subranking is ABOVE AVERAGE for primary, subprime, and special servicing.

New loan boarding

Caliber's sales and acquisitions team handles loan boarding and releases. Caliber electronically boards 100% of mortgage loan data to its servicing system. It conducts data-to-document validation for approximately 50 data fields on a boarding sample. If any validation test exceeds the tolerance level for that test, the test population is expanded. Caliber reports that it completed this validation on approximately 14% of the boarded loans for the first half of 2020, which is lower than peer averages. There were no loans boarded during the second half of 2020. Caliber utilizes a data integrity management system, which is a servicing-wide procedure run against the test and production environments to identify illogical data conditions. These tests are run on a nightly basis and include approximately 500 data comparison rules. The average loan boarding time was five days for the first half of 2020, which is a longer period than its peers.

Payment processing

Caliber evidences satisfactory cash management operations with segregated cash and reporting channels and appropriate internal controls to ensure timely reporting, remitting, and reconciliation functions are performed.

Caliber's lockbox processing rate continues to decline and was reported as 8.64% as of year-end 2020. The decline in lockbox processing is offset by the increase of recurring transfers and payments made through the servicers website. This is consistent with shifts in borrower payment habits we have observed over the last few years. Caliber processes 5% of payments manually due to various payment rejections, which is in line with other servicers.

In response to the work-from-home environment resulting from the COVID-19 pandemic, Caliber created three separate secure cash rooms to allow for social distancing and team segregation.

Suspense payments are managed through rules programmed in the servicing system. Exceptions are routed to the business units for posting instructions. Daily suspense reports are produced as well as a monthly report showing suspense accounts by business unit and aging.

Investor reporting

The investor reporting team reports, remits, and reconciles accounts according to industry practices and investor guidelines. Caliber appropriately separates the cash reporting and remitting functions from the parties that reconcile the accounts. Management reviews investor reports and reconciliations, and 100% of investor reporting and remitting is electronically transmitted. For the six months ended Dec. 31, 2020, the company reported no aged open items.

Caliber implemented a workflow application for the bank reconciliation process in 2019. In addition to workflow tools, the application includes automation to match transactions for research, executive dashboards, and task tracking.

Caliber's investor servicing controls team performs control self-assessments that ensure Caliber reports and remits according to pooling and servicing agreements, and it performs USAP and RegAB monitoring and reporting systems access testing and system parameter reviews. The controls are now stored within the workflow system. We believe it has satisfactory processes and controls for reconciling all accounts and the related investor reports.

Escrow administration

We believe Caliber operates a sound escrow administration area. The senior vice president of escrow moved to another position since our last review and was replaced by a longtime escrow manager. Caliber utilizes vendors to track and monitor property insurance, manage hazard loss processing, monitor and process real estate taxes, perform loan escrow analysis, and monitor homeowner association payment status. In addition, vendors provide call center support for tax- and insurance-related customer calls. Caliber staff members manage all mortgage insurance processes, including premium payments, cancelations, and reconciliations. The monitoring of the escrow vendors was transferred to the business controls department from the escrow management department since our last review; however, the escrow management department continues to hold its monthly vendor management calls. Oversight and monitoring of Caliber's tax and insurance vendors includes:

• Ensuring compliance with Caliber policies;
• Reviewing performance to ensure compliance with SLAs;
• Performing phone monitoring of vendor-routed customer calls along with monthly calibration calls;
• Holding weekly vendor meetings; and
• Publishing monthly scorecards.

Caliber continues to implement initiatives aimed at improving the customer experience in the escrow area, with the following changes implemented since our last review:

• The escrow analysis statement was modified to improve clarity for borrowers.
• Updates to the IVR system and website were implemented that allow customers to see their most recent tax and insurance payments.
• Scripting was implemented in the IVR system, website, and customer service that evaluates the loan to determine eligibility to remove mortgage insurance.
• Messages were added in the borrower portal that show borrowers the current step of their mortgage insurance removal.
• Videos explaining insurance loss draft and force placed insurance processing were added to the website.
• The insurance vendor implemented virtual inspections in mid-November 2020.

Metrics for the insurance and tax vendors call center abandon rate and average speed of answer are in line with peers. Servicer-related tax penalties were reported at $0.05 per loan for the portfolio, which, while slightly higher than other servicers, are within an acceptable range and an improvement in Caliber's historically reported penalties.

Mortgage reconveyance

Caliber utilizes a vendor to manage its lien-release process. We believe Caliber's mortgage reconveyance processes are effectively controlled to reduce the risk of loss from a failure to comply with state reconveyance timelines. The company says that, for the six months ended Dec. 31, 2020, it did not incur any penalties on the 0.27% of the portfolio with completed or in-process reconveyances completed outside of statutory compliance.

Special loans administration

For adjustable-rate loans, staff perform audits of all loans with upcoming adjustable-rate mortgage (ARM) adjustments to validate the ARM terms against the note, rider, and any modification agreement. Exception reporting and illogical condition reports are used to identify any potential issues with rate and payment adjustments.

The servicing portfolio is matched against the Defense Manpower Data Center on a quarterly basis to identify borrowers on active duty status that may be subject to the Servicemember's Civil Relief Act. This is in addition to the checks performed during the default process.

Customer service and collections

Caliber began the transition to combine its customer service and collections units in October 2019 to create its core call center. All groups have been combined with the exception of the outbound-only call team, which is targeted to be integrated during the first quarter of 2021.

Within the core call center, staff receive both customer service and collections training as call center representatives will work inbound, outbound, and blended call queues. A dedicated team, the gold standard team, was created to support the representatives with training and real-time call support, facilitated through a manned chat line. For the second half of 2020, there was no turnover for management, while the annualized turnover rate for the call center was 7.39%, which we consider acceptable.

Caliber maintains an effective call center operation that utilizes agents, an IVR system, a website, and a mobile application to provide information to customers. An internally developed tool aggregates key account data from the servicing system to a single screen presented to the customer service agent to help expedite call handling.

Caliber records 100% of calls with screen capture, and the quality assurance department monitors the quality of the call center staff by listening to calls for regulatory and policy compliance, professionalism, and branding. The number of calls per agent varies depending on the tenure of the employee and their prior month's score. All new hires have 10 calls per month monitored. Tenured staff members have five calls per month monitored. In addition to the call monitoring by the quality assurance department, the gold standard team management performs call monitoring on five calls per agent per month to ensure agents provide the appropriate options for the borrower, listen actively, are professional, and have the appropriate tone.

Caliber has the following additional service indicators, which all compare favorably to peers:

• An 74% IVR capture rate;
• 82% website registration;
• A 59-second average speed of answer and 2.73% abandonment rate; and
• A 96% first call resolution rate.

Caliber has a formal customer experience program (CLEAR), which it established in 2017. Since our last review, this team transitioned to pre-foreclosure from the customer service department. The intent of the program is to look across the platform to improve customer service. A dashboard is used to monitor performance metrics related to the customer experience. Caliber sends a post-customer service call survey to customers via email immediately following a customer service call and includes questions specific to the borrower's interaction with Caliber.

Default management

Overall, we believe Caliber has effective procedures for default management and REO assets, efficiently uses technology, and provides satisfactory oversight of its vendor relationships.

The collections department, called "account resolutions" at Caliber, handles borrowers from one to 44 days past due, after which a single point of contact (SPOC) will manage the account. Collectors work in a blended call environment utilizing risk scores for call prioritization. Collectors are also assigned to special calling campaigns designed to target high-risk loans, early payment defaults, and expiring loan modifications. Caliber's loss mitigation SPOC is assigned when a loan becomes 45 days delinquent or after receiving loss mitigation workout documents, whichever is sooner. Caliber has two groups of SPOCs: One is responsible for outreach, and the other is responsible for managing the workout once the borrower is engaged.

While the total delinquency for the prime portfolio was up from the prior year end as of December 2020, it was down from June 2020 reporting. The subprime/special portfolio remained relatively flat (see tables 4 and 5).

Table 4

Table 5

Turnover rates, industry experience, and company tenure for default management and staff were in line with or better than peers (see table 6).

Table 6

Key collections metrics and controls we considered in our analysis include:

• That Caliber reported promise-to-pay success rates for 30-day and 60-day delinquencies of 75.21% and 78.91%, respectively. Both metrics compare favorably to peers.
• The collections average speed of answer and abandonment rates (see table 7), which we consider to be good.
• A scoring model, which is used to prioritize collection calls based on risk and borrower behavior.

Table 7

Loss mitigation

Caliber segments its SPOC teams by early stage (less than 120 days delinquent) and late stage (120 days or greater delinquent). SPOCs are trained in all delinquency resolution options and utilize the workflow system to help identify the appropriate solutions based on the borrower's intent and situation as well as the investor (see table 8).

Table 8

SPOCs are set up on teams for outreach, engagement, and resolution. Caliber also has a post-modification outreach program called Caliber Cares, which is embedded in the SPOC function. This proactive client service and portfolio management effort involves contacting borrowers with newly modified loans to help them understand the terms of the modification and resolve any customer issues or questions.

Loss mitigation for retention and liquidation programs is now managed by a single group, a change from our prior review. The retention group is made up of document control, underwriting, and closing teams while property solutions, short sale fulfillment, and deed-in-lieu fulfillment team make up the liquidation group. Key highlights and controls of loss mitigation include that:

• Documents submitted to Caliber are automatically scanned into the imaging system and trigger loss mitigation tasks within the loss mitigation engine;
• Data from documents processed through the imaging platform can be updated in the loss mitigation engine;
• Borrowers can submit documents via the Caliber website;
• Service orders for escrow, property valuations, credit reports, and title reports are automated; and
• There is a 100% review of modification documents prior to shipping to the borrower.

In response to increased activity due to the COVID-19 pandemic and CARES Act, Caliber added to its loss mitigation staff as well as temporarily augmented it through the redeployment of Caliber employees from other areas and the use of foreclosure law firm staff.

In our view, Caliber has a well-organized loss mitigation area that utilizes capable systems to identify the best solution to resolve the default and mitigate loss.

Foreclosure and bankruptcy

Caliber uses Black Knight's LPS Desktop software to assist with foreclosure and bankruptcy workflows and timeline monitoring. The pre-foreclosure review team manages the creation and review of the attorney referral packet and completes the foreclosure review, which includes verification that all required investor and regulatory requirements have been met prior to foreclosure referral. The foreclosure area is divided into separate teams responsible for timeline management, document execution, foreclosure timeline, and post-sale, invoicing, and title curative work. Key foreclosure attributes metrics include:

• An attorney portal that provides attorneys direct access to the required documents for the loans assigned to their firm.
• Monthly calls held with firms to review scorecard and quality.
• A 100% post-production audit that all foreclosure bids go through.
• A Federal Housing Administration (FHA) surveillance team that was established to monitor and manage FHA loans for adherence to first legal timelines across servicing.

The Caliber bankruptcy department is comprised of three teams:

• The back office filing requirements team perform loan audits and preparation of filings and notices.
• The attorney- and customer-facing group monitors and manages attorney and customer account activity.
• The offshore support team performs account setup and maintenance and performs administrative tasks.

Multiple quality checks are performed throughout the bankruptcy processes, including multilayer reviews of filing documents, claims, notices, and payment plan reconciliations.

In our view, Caliber's foreclosure and bankruptcy groups have implemented appropriate solid processes to mitigate risk.

Real estate-owned

Caliber uses a vendor to manage its prime REO portfolio whose adherence to SLAs is monitored via reporting from the REO platform. Online and on-site auctions are used only on a case by case basis for aged properties or those with low equity. The non-prime REO assets are now serviced by the asset owner, a change since our last review and the reason for the reporting of zero assets for the Dec. 31, 2020, reporting period (see table 5). Typically, if a servicer uses vendors for REO management they will use multiple vendors. With the transfer of the subprime/special portfolio to the asset owner, Caliber's REO-eligible assets from its prime portfolio is small and, therefore, we feel this mitigates the risk of a single investor.

Financial Position

The financial position is SUFFICIENT.

Related Research

• Caliber Home Loans Inc. ABOVE AVERAGE Residential Mortgage Primary, Subprime, and Special Servicer Rankings Affirmed, March 10, 2021
• Select Servicer List, Feb. 3, 2021
• Servicer Evaluation Spotlight Report™: Environmental, Social, And Governance Factors Have Consistently Powered Our Servicer Evaluation Rankings, Nov. 16, 2020
• Servicer Evaluation Spotlight Report™: U.S. Residential Mortgage Servicers Gear Up To Face COVID-19 Related Challenges, April 10, 2020
• Servicer Evaluation: Caliber Home Loans Inc., July 8, 2019
• Analytical Approach: Global Servicer Evaluations Rankings, Jan. 7, 2019