Ranking Overview
Residential primary servicer
Overall ranking	AVERAGE
Subranking
Management and organization	AVERAGE
Loan administration	AVERAGE
Outlook	Positive
Residential special servicer
Overall ranking	AVERAGE
Subranking
Management and organization	AVERAGE
Loan administration	AVERAGE
Outlook	Positive
Financial position	SUFFICIENT

Key Ranking Factors

• A proven ability to grow the portfolio in a measured manner.
• An experienced management team and staff, with low turnover metrics.
• An acceptable training program that was enhanced with new courses, with other learning activities planned for 2017.
• Well-developed policies and procedures.
• Quantitative metrics that are generally competitive with its peer group.
• Multiple levels of internal controls that seek to verify the company is complying with investor and regulatory requirements.
• No material findings in any audit or quality control reports.
• A satisfactory systems environment that continues to improve.
• Sound default administration processes.
• Although the internal audit (IA) provider requires immediate follow-up on significant issues and reports all findings to senior management, IA only follows up on lower-risk items during the next scheduled review.
• The vendor management performance review process within the servicing business units is somewhat informal, although they are enhancing it through monthly scorecard grading of most vendors.

Opinion

S&P Global Ratings' residential primary (prime) and special servicer rankings on Planet Home Lending LLC (PHL), a wholly owned subsidiary of Planet Financial Group LLC, are AVERAGE. On May 12, 2017, we affirmed these rankings (please see "Planet Home Lending LLC AVERAGE Primary And Special Rankings Affirmed; Outlooks Are Positive"). The outlooks are positive for both rankings.

PHL has successfully increased its portfolio while also establishing a separate business devoted to subservicing loans (mainly distressed at this time) for private clients. PHL hired additional management and staff to accommodate the growing portfolio, as well as implemented the necessary changes in its infrastructure to ensure it can properly service the increased volume of accounts. PHL strengthened internal controls by establishing two new auditing mechanisms and making certain changes in the technology environment to allow for better service to its borrowers as well as increased efficiencies.

PHL has focused on growing the portfolio at a measured pace while implementing additional improvements to the operation. Quantitative metrics continue to show that the company is a sound servicer compared to similar peers.

Key Changes Since Our Last Review

• Opened an office in New York that handles special servicing for private clients;
• Hired several new senior and middle managers due to portfolio growth, including a vice president, deputy general counsel; senior vice president, senior risk officer; and a senior IT infrastructure manager;
• Introduced additional training courses;
• Implemented a compliance testing program and also completed a Statement on Standards for Attestation Engagements (SSAE) 16 Service Organizational Control (SOC) 1 Type 1 exam;
• Changed when most quality control reviews are performed to monthly from quarterly;
• Introduced a compliance testing program;
• Although only in a pilot program, moved the performance of certain administrative functions to an offshore vendor;
• Now performs a customer service survey via telephone; and
• Implemented a behavioral scoring tool and a loss mitigation Web-based portal.

Outlook

The outlooks are positive. PHL has made various enhancements to its operations over approximately the past 12 months, including improvements in its internal control environment and technology infrastructure. It hired additional experienced management and staff to ensure it can service its existing accounts, and its growth plans emphasize moderate expansion over the next few years. As such, management wants to secure the necessary people and infrastructure to successfully manage its future business plans. Servicing metrics continue to be competitive with similar peers. We believe PHL will remain a competent residential primary and special servicer in the mortgage marketplace. Assuming the company continues to exhibit sound qualitative and quantitative performance, as well as continues to enhance the operation, we may raise our rankings or subrankings when we complete our next review.

In addition to conducting an on-site meeting with servicing management, our review includes current and historical Servicer Evaluation Analytical Methodology (SEAM) data, through Dec. 31, 2016, as well as other supporting documentation provided by the company.

Profile

Servicing Profile
Servicing location	Meriden, Conn.
Loan servicing system	BKFS-MSP
Portfolio types	RMBS prime, special
As of Dec. 31, 2016
Number of servicing employees	146
Volume (mil. $ unpaid principal balance)	12,331.8
Loan count	79,601

PHL was formed in June 2007 under the name Green Planet Servicing LLC, and subsequently changed its name to Planet Home Lending LLC in 2014. It is a wholly owned subsidiary of Planet Financial Group, LLC (PFG), which is owned by a private equity fund (MHR Fund Management LLC). It began servicing loans in 2008, with a focus on acquiring distressed whole loans. The company has more than 500 employees, of which approximately 146 are servicing staff. The main servicing office is located in Meriden, Conn., with additional sites in Rochester, N.Y.; Tampa, Fla.; and Dublin, Calif.

PHL operates retail, wholesale, and correspondent divisions, with offices in New York, Florida, Texas, and California; the retail center based in New York focuses mainly on retention activities and accounts for approximately 40% of total originations. PHL originated $2.7 billion of primarily Ginnie Mae loans in 2016, an increase from $900 million the prior year. Much of the increase was due to an expansion of its wholesale and correspondent channels. It recently added the Texas location, which handles wholesale originations. An office in Maryland focuses on capital markets, IT, and finance. It is currently an approved seller/servicer for Freddie Mac, Fannie Mae, and Ginnie Mae.

PHL continues to focus on growing through its origination channels and via smaller bulk acquisitions; the most recent such transfer involved approximately 4,700 loans, representing a $1 billion unpaid principle balance, in February 2017. The company plans to eventually subservice distressed commercial loans for various clients. In late 2016, PHL established the Rochester office (known as Planet Management Group), which is responsible for growing the company's subservicing business. Staffed with 10 employees, it addresses special (sub) servicing relationships for 10–12 private clients. The current portfolio stands at almost 2,300 accounts, and existing clients are providing flow volume of mainly distressed accounts. The office is supervised by a former mortgage banking executive who has extensive industry experience. Management would like to have a subserviced portfolio of approximately 10,000 loans by year-end 2017.

Although currently servicing a $12.3 billion portfolio (see table 1), management believes it can achieve a $50 billion portfolio within the next four years by gradually increasing the volume by $10 billion annually; PHL emphasizes modest growth in order to ensure the servicing infrastructure can properly handle increases in the portfolio. Much of the existing special serviced portfolio consists of a previously purchased Veterans Administration portfolio of delinquent interest rate reduction loans.

Table 1

Portfolio Volume
	Prime		Special
	Units (no.)	Volume (mil. $)	Units (no.)	Volume (mil. $)
Dec. 31, 2016	65,484	10,537.6	14,117	1,794.2
Dec. 31, 2015	35,276	5,559.2	18,206	2,516.4
Dec. 31, 2014	39,743	6,515.3	20,298	2,917.8
Dec. 31, 2013	7,397	785.4	22,675	3,391.1
Dec. 31, 2012	34,561	5,025.6	N/A	N/A
N/A--Not applicable.

Management And Organization

The management and organization subrankings are AVERAGE as a residential primary and special servicer.

Staffing and turnover

PHL's senior and middle management experience compare well with its peers in terms of both industry and tenure levels.

• Senior managers average 30 years' experience and five years' tenure.
• Middle management has 14 years' mortgage experience and four years' tenure.
• Management turnover is 4.17% and staff turnover averages 4.10%, which are better than peer averages.

Training

We believe PHL has a satisfactory training program. A dedicated servicing trainer conducts instructor-led sessions across all sites. PHL also uses on-the-job and Web-based instruction. There are monthly training meetings to discuss any needs for the organization. Within the last year, the department updated different courses to better reflect the current regulatory environment. Highlights of the program include:

• There is a six-hour new hire orientation.
• A two-week structured training program introduces the new employee to all aspects of the mortgage industry, systems, and servicing.
• There is two additional weeks of on-the-job instruction specific to the employee's responsibilities.
• Certain compliance courses require annual recertification by all staff while others are position specific (e.g. courses on the Fair Debt Collection Practices Act and fraud detection).
• PHL developed new courses such as a corporate advance certification class, fair lending for servicing training, and additional systems training for a newly instituted loss mitigation portal.
• A learning management system tracks registration and provides reporting to management.

Future initiatives for 2017 include introducing a more structured on-the-job program that uses training guides when mentoring new hires and introducing additional e-learning courses that focus on soft skills for supervisory and managerial personnel.

Structure

Two senior vice presidents responsible for servicing operations and default, respectively, report to the president of PHL servicing, who in turn reports to the CEO and president of PFG. The PHL president also oversees other areas such as servicing administration and project management. The executive vice president of private client services similarly reports to the CEO. The company has hired several new senior and middle managers over the past 12 months due to portfolio growth.

Internal controls

In our view, PHL has comprehensive policies and procedures. The manuals are written in a logical order and in many instances include hyperlinks to other topics and sample screen prints. We considered the following characteristics and controls in our analysis:

• The manuals are subject to at least annual updates.
• The business unit manager sends any requested revision to a dedicated email box that the technical writer monitors.
• The technical writer prepares a draft and, as applicable, forwards it to legal/compliance for review, and subsequently to the business unit manager for approval.
• Once all approvals are obtained, the writer posts the revisions online.

Each business unit is responsible for maintaining its applicable letters. The business unit would interact with the compliance department on any proposed changes regardless of the change.

We believe PHL maintains good oversight over its operations through multiple auditing mechanisms consisting of quality control (QC), IA, and compliance. From a departmental perspective, managers review reports that are generated daily, weekly, and/or monthly to ascertain any issues, although some functions, such as cash processing, do review a sample of transactions. A senior risk officer uses an enterprise-wide governance, risk, and compliance system to identify and monitor QC, IA, and compliance findings.

QC is independent of servicing. The director of QC reports to a new senior vice president/senior risk officer, who reports to the chief compliance officer. PHL currently outsources the QC function to a vendor, but management plans to perform this function with internal staff by approximately May 2017. Attributes and controls for QC include:

• Most servicing areas now undergo monthly reviews; PHL previously conducted quarterly exams of several areas.
• A software application is used to select the sampling size, perform the reviews, and input the results for corrective action.
• Findings are graded as minor, moderate, or serious.
• An overall audit risk rating of low, medium, or high is assigned to the report.
• The business unit must enter a response into the system within 14 days that details the remediation plan.
• QC performs subsequent testing to ensure the issues were properly resolved.

A separate accounting firm provides IA consulting services to the company and has performed this function for the past five years. The firm assigns risk ratings to areas on a 1-5 scale, with the higher number indicating increased risk. There is no grading of identified audit issues, but management ensures the affected department remediates items in a timely manner. Although PHL's senior vice president/treasurer oversees the development of the IA plan in coordination with the accounting firm, PHL senior management must approve the final audit plan. Attributes and controls are as follows:

• The IA plan is re-evaluated throughout the year to encompass any emerging issues or trends, and the 2017 plan addresses critical servicing areas.
• The IA plan also includes a review of information technology (IT).
• There is an annual risk assessment, with high-risk areas reviewed annually and medium risk every two years.
• Any identified issues are tracked for remediation in the audit vendor's database.
• The business unit must respond with an action plan within two to three weeks and forward final reports to the PHL risk committee.

The current practice is for the accounting firm to follow up on any findings during the next scheduled review as long as the issue is not considered significant. However, it is the department's responsibility to implement corrective action and inform management and IA when the issue has been remediated. In addition, the senior vice president identifies perceived serious findings independently of the report and notifies the risk committee accordingly. We have observed that many servicers' IA programs perform updated reviews of serious and moderate risk findings on a regular basis to confirm that the affected area has completed remediation.

PHL's legal/compliance department is responsible for many functions such as overseeing regulatory exams and escalated complaints, monitoring licensing activities, and handling litigation and corporate governance, regulatory reporting, and researching/tracking laws and regulations. It introduced a compliance testing program in late 2016 and also hired a deputy general counsel earlier in the same year. Departmental highlights include:

• When any minor or moderate changes result from a regulatory announcement, compliance prepares a draft summary that is sent to management with subsequent training and policy updates.
• For major changes, a designated project manager oversees a team from the affected areas to implement the revision, with similar updates to procedures and future training.
• The department recently introduced a compliance testing program.
• Two analysts review different functions for compliance with various state and federal regulations related to areas such as periodic statements, adjustable-rate (ARM) loans, and credit reporting, among others.
• The overall report rating scale is superior, satisfactory, needs improvement, and unsatisfactory, based on the exception percentage within the auditable function.
• Management remediation plans are required for all findings regardless of severity.

The senior vice president/senior risk officer is in the process of developing operational risk management framework policies and procedures for the organization. This individual is holistically evaluating the organization to enhance risk reporting and monitoring of the control environment, especially as it affects legal and compliance matters. He will be reviewing all action plans developed by management based on the suggested framework.

In addition to the above controls, management holds monthly operational risk meetings that senior executives and business unit leaders attend. The meetings focus on various items such as QC/IA/regulatory exam results, litigation, and customer complaints. Another working group meets weekly to discuss legislative changes. There is also a monthly portfolio review that focuses on various aspects of the servicing portfolio. Its quality assurance (QA) monitoring program performs reviews of customer service, collection, and loss mitigation employees.

In preparation for the new Consumer Financial Protection Bureau servicing rules that will be implemented in late 2017 and early 2018, management created a project team consisting of subject matter experts, legal, compliance, and other areas to determine changes needed and subsequent staff training. Additionally, PHL completed a SSAE 16 SOC 1 Type 1 report.

We reviewed the third- and fourth-quarter 2016 IA reports, as well as 2016 QC reports, which did not disclose any material findings. We reviewed a SOC 2 Type 2 report on its systems environment--which encompasses areas such as security, availability, processing integrity, and privacy--from December 2016. The report disclosed no significant findings. The January 2017 SOC 1 Type 1 exam did not reflect any findings, and management plans to begin a SOC 1 Type 2 exam in fourth-quarter 2017. A review of a completed 2016 compliance audit disclosed only minor findings, which management was in the process of remediating or had remediated. Management indicated there were no material findings from any state exam to date.

Complaint management

PHL can receive complaints verbally, through correspondence, or via the website. The respective departments generally review non-escalated customer complaints and respond to the customer. In customer service, a dedicated correspondence person creates the response, which the vice president reviews before it is sent to the customer. Any escalated complaints (e.g., addressed to the president, from regulatory bodies, etc.) are researched by the business unit, with the results provided to a paralegal in the compliance department. This person drafts the initial response, which is subsequently reviewed by the deputy general counsel or chief compliance officer. PHL images all borrower letters and responses. The department employs a third-party software application for all complaint management tasks, such as tracking and root cause analysis, which includes qualified written requests.

Vendor management

PHL established its vendor management program approximately three years ago, and it reports to the director in the IT department. The business unit represents the first line of defense for monitoring vendor performance, as they assess the performance metrics and maintain contact through onsite meetings or via telephone contact with the vendor. The frequency of contact depends on the nature of the relationship and if there are any issues. Managers within the business unit serve as relationship managers for the vendor. However, the departments do not currently produce monthly scorecards on all of their significant vendors; we have observed that other servicers routinely produce scorecards on a regular basis with their critical vendors. The departments do, however, provide at least annual feedback to vendor management and notify them of any issues. When entering into and monitoring a relationship with a vendor, the following controls are in place:

• The due diligence process encompasses a risk assessment of the vendor based on the results.
• Vendors are classified as critical, significant, or nonsignificant, and there is an annual reassessment process.
• Reviews assess compliance, strategic, operational, and reputational risks, among other factors.
• Two dedicated analysts monitor PHL's vendors on a rolling basis by reviewing various news media to see if the vendor was adversely affected by some issue.
• Servicing and vendor management perform an annual onsite review of critical vendors.
• Vendor management produces an annual scorecard of vendors inclusive of attorneys.
• Third-party software is used to track/manage vendor information, including the annual scorecards and risk reassessments.

Systems and technology

PHL operates in a well-automated environment with good systems and support. The company conducts regular intrusion penetration that tests both internal and external sources and performs user access control reviews quarterly. A data warehouse retains all system information, which now includes call center recordings. In 2016, the department established several new positions whose responsibilities may have belonged to other individuals previously. This included hiring separate disaster recovery, security, infrastructure, and telecom analysts, in addition to two programmers. Its technology infrastructure is as follows:

• Black Knight Financial Services' mortgage servicing package (MSP®) is the main system of record, which includes various servicing applications such as LoanSphere for processing accounts in foreclosure and bankruptcy.
• A vendor-provided document imaging platform.
• A vendor-provided workout application.
• A centralized data center in Baltimore, Md., with backup sites in Pittsburgh, Pa., and Memphis, Tenn., which are all via a vendor relationship.
• A security analyst is responsible for cybersecurity and works with a network engineer to resolve any issues.
• Quarterly phishing testing.
• A satisfactory disaster recovery/business resumption plan, which is reviewed annually, and relies on other offices as well as employees working remotely.
• The business continuity plan was tested in November 2016, and there were only minor findings.

The call center now has a wall board that reflects common customer service metrics, which management and staff can both see.

Insurance and litigation

The company has represented that it maintains adequate directors and officers, as well as errors and omissions coverage, given the size of its portfolio.

Management said there are no material lawsuits outstanding that would have an adverse effect on the company.

Loan Administration

Our subranking is AVERAGE for loan administration as a residential primary and special servicer.

The Meriden office serves as the headquarters for all core servicing operations and default management functions. In addition, the Tampa and Dublin offices serve as call centers for customer service, collections, and loss mitigation functions. The Rochester servicing site handles special servicing tasks related to customer communication for borrowers 60-plus-days delinquent, loss mitigation, and real estate-owned (REO) for PHL's private clients. Management is currently involved in a pilot program with a vendor based in India to perform certain administrative functions (e.g. indexing); it does not involve any customer-facing activities.

We believe the geographic distribution of PHL's accounts is satisfactory (see table 2).

Table 2

Portfolio Distribution By State
Prime/special
Top five states	Units (%)	Unpaid principal balance (%)
Texas	13.16	11.98
California	10.07	16.15
Florida	7.61	7.06
Michigan	6.81	4.71
Georgia	4.49	3.88
Others	57.86	56.22
Total	100.00	100.00

We reviewed various aspects of loan servicing, including loan boarding, payment processing, investor reporting, customer service, escrow administration, and default administration.

Loan boarding and rate administration

There is a 100% electronic boarding rate and an almost 100% document-to-system check of critical fields. There are separate boarding spreadsheets for regular versus private clients. A conversion spreadsheet tracks critical timeframes for certain functions such as forwarding welcome and transfer letters. Loan boarding process features include:

• An approximate one-day boarding timeframe for newly originated loans and three days for transfers.
• Imaging of all critical documents, with desktop access for staff.
• Customer service employees make welcome calls, though a vendor is used as necessary to assist with bulk acquisitions.
• A separate analyst boards loans for private client relationships.
• Qualified mortgage (QM) loans are flagged in the servicing system.
• Default employees perform their own welcome calls, assuming the loan is delinquent.

Staff employees verify files, and those with in-flight loss mitigation are immediately referred to the appropriate department for contact. The default area then confirms it has all the necessary documents and contacts the servicer or client if there are any issues.

ARM loans make up approximately 15% of the portfolio. Personnel perform dual verifications to ensure accurate indices have been correctly inputted into the system.

Cash management

PHL's cash processing department operates from a secure cash room. It uses one external lockbox through a bank. Features of cash management include:

• A 95% electronic processing rate, an increase from 91% the prior year.
• Checks requiring further research remain in the department as staff contact the affected area for further instructions.
• Introduction of e-bill presentment in 2016.
• No turnover of cashiering staff.
• Payments made through the company website do not incur a service charge.

Investor reporting

PHL has an appropriate segregation of duties among reporting, reconciliation, and remittance functions. The department performs Home Affordable Modification Program reporting for certain government-sponsored enterprise loans in its portfolio (see table 3). Risk management procedures and metrics that we factored into our analysis include:

• No turnover in the department, which is better than that of its peers.
• A 100% electronic reporting and remittance rate.
• Both daily and monthly reconciliations of custodial and clearing accounts.
• Required management sign off on all reports, reconciliations, and remittances.
• Monthly and annual reconciliations of the Mortgage Electronic Registry (MERS) system, as loans are held in MERS' name until foreclosure initiates.
• No aged open reconciling items.

Table 3

Portfolio Breakdown By Investor (%)
Investor	Prime/special
Fannie Mae	4.36
Freddie Mac	6.90
Ginnie Mae	84.57
MBS investor	0.00
Portfolio	1.67
Other investor	2.50
Total	100.00
MBS--Mortgage-backed securities.

Escrow management

Approximately 97% of the loans in the portfolio have escrow accounts. The department uses separate tax and insurance vendors. PHL outsources all insurance functions to the insurance vendor, including customer calls. Escrow management processes and statistics include:

• Non-reimbursable tax penalties were $0.05 per loan, which was better than the average of its peer group.
• Acceptable lender-placed and cancellation rates, in our view.
• The tax vendor sends a series of letters to the customer on non-escrow accounts if there are delinquent taxes.
• The insurance vendor sends a series of letters over a 60-day period requesting proof of insurance before issuing a lender-placed policy.
• A 1.90% abandonment rate and 31-second average speed of answer (ASA) for the insurance vendor, which we believe are good statistics.
• The director of the department listens to a sampling of the insurance vendor's calls.
• A series of calls and meetings with its vendors to discuss performance and address issues.

Customer service

The department works satisfactory hours to accommodate its geographically diverse portfolio. A dedicated QA person, reporting to the call center manager, monitors calls. The telephone system has a bilingual queue option for Spanish-speaking borrowers. Borrowers can use the interactive voice response system to make a payment until the 15th day of delinquency. Customer service agents are trained to handle calls related to accounts less than two payments past due, and there is a dedicated Spanish-speaking representative. Attributes and metrics include:

• No turnover for management or staff, with the rate for staff improving from 23% as of our last review; both are better than peer levels.
• 100% call recording.
• QA monitors eight to 12 calls monthly per employee, with subsequent performance grading.
• A customer survey via telephone was introduced in October 2016; the QA specialist reviews any call graded below 85%.
• A first call resolution rate of 87%, which is better than that of its peers.
• No Real Estate Settlement Compliance Act or Fair Credit Reporting Act compliance issues.
• 86% of customers are registered website users.

Lien-release documents are prepared by internal staff using a vendor-provided system. To improve efficiency, PHL began using a vendor for lien release (including providing the vendor with signing authority) in states that have short release and recording timeframes. There have been minimal penalties assessed for failure to timely reconvey a paid-off loan, though PHL's reconveyances out of statutory compliance was higher than that of its peers.

Call center metrics related to customer service were comparable to those of its peer group, while the combined collections/loss mitigation statistics were better than those of similar servicers (see table 4).

Table 4

Average Speed Of Answer And Abandonment Rate*
	Average speed of answer (seconds annualized)	Abandonment rate (% annualized)
Customer service	28	3.00
Collection	16	3.25
Loss mitigation	16	3.25
*Collection and loss mitigation are combined statistics.

Default management

PHL's default management turnover, experience, and tenure levels compared favorably with those of similar servicers, and certain figures were better (see table 5). For example, collection turnover and senior management experience were better than that of its peers, and loss mitigation management/staff experience was much better than that of peers. REO management turnover was high, but this is due to the low number of managers in the department, which makes it appear elevated. In collections and loss mitigation, the respective managers monitor and grade the staff calls, but a separate default operations person in Tampa reviews them for additional validation.

Table 5

Experience And Tenure*
	Management			Staff
	Avg. industry experience (years)	Avg. present employer experience (years)	Turnover rate (%)	Avg. industry experience (years)	Avg. present employer experience (years)	Turnover rate (%)
Collection	17	4	0.00	6	3	0.00
Loss mitigation	20	3	0.00	11	2	4.00
Foreclosure	8	9	0.00	8	2	12.50
Bankruptcy	8	9	0.00	8	2	12.50
Real estate owned	10	1	50.00	4	1	0.00
*Bankruptcy numbers are combined with foreclosure because these areas have the same management/staff.

Delinquency levels have been decreasing in both the prime and special serviced portfolios. The high delinquency rate in 2012 resulted from a previous acquisition of delinquent VA loans (see tables 6 and 7).

Table 6
Prime Delinquency Rates*
Year	Total delinquency (%)	30-59 days delinquency (%)	60-89 days delinquency (%)	90+ days delinquency (%)	Bankruptcy (%)	Foreclosure (%)	Real estate owned (#)
Dec. 31, 2016	5.82	2.99	0.87	1.96	1.20	2.01	37
Dec. 31, 2015	6,57	2.00	0.80	3.77	1.48	2.19	10
Dec. 31, 2014	7.77	2.45	1.00	4.32	N/A	1.58	6
Dec. 31, 2013	7.65	2.62	0.96	4.07	N/A	3.88	53
Dec. 31, 2012	16.94	5.72	2.53	8.69	0.03	0.13	61
*Dec. 31, 2012 data is prime/special combined. Bankruptcy data for Dec. 31, 2013 and 2014 are included in the special delinquency table.

Table 7

Special Delinquency Rates
Year	Total delinquency (%)	30-59 days delinquency (%)	60-89 days delinquency (%)	90+ days delinquency (%)	Bankruptcy (%)	Foreclosure (%)	Real estate owned (#)
Dec. 31, 2016	5.43	3.71	1.35	3.37	2.65	6.18	12
Dec. 31, 2015	13.32	3.14	1.38	8.80	1.47	4.95	10
Dec. 31, 2014	15.52	3.64	1.78	10.10	0.99	5.56	15
Dec. 31, 2013	17.73	4.52	2.37	10.84	1.02	3.90	6

Collections

Collectors address accounts up to 89-days delinquent, at which point it is referred to a single point of contact (SPOC) in loss mitigation. The department uses various Web-based services for any skiptracing. Management, depending on the circumstances, uses its autodialer at all stages of the delinquency. The department's collection methodology, metrics, and highlights include:

• Satisfactory weekday and, as applicable, weekend shifts to canvass the portfolio.
• Monitoring of 10 calls monthly per collector.
• 100% call recording.
• Implemented a behavioral scoring application.
• Promise-to-pay success rate is 48.29% and 48.42% for accounts 30-days delinquent and 60-days delinquent, respectively, the former of which is much lower than peer averages while the latter is similar to comparable servicers.
• PHL is an approved servicer for the Hardest Hit Funds program in 20 states.

Loss mitigation

We believe the loss mitigation department employs prudent practices when attempting to engage in a workout scenario. The assignment of a SPOC to a borrower is based on the last three digits of the loan and is assigned at the 45th day of delinquency. PHL uses both an application within its existing system and a vendor-provided solution for loss mitigation, the latter of which performs a net present value analysis to assist in determining a loss mitigation strategy. PHL engages in various workout options, with modifications remaining the largest segment (see table 8). Since our last review, PHL implemented the workout vendor's Web portal, which allows borrowers facilitated access to completing and tracking their loss mitigation requests.

Table 8

Loss Mitigation Breakdown (%)
Resolution type	Prime/special
Deed-in-lieu	1.50
Short sale	4.87
Paid-in-full	10.03
Modification	44.52
Forbearance plan	35.52
Other	3.56
Total	100.00

PHL's workout methodology is effective and includes the following controls and metrics:

• Borrowers may now upload completed workout packages directly to the system in addition to the normal communication mediums available, such as a dedicated email box or fax.
• Borrowers can also ascertain the status of their workout requests and fill out a workout questionnaire online, which is then uploaded to the system.
• There is no SPOC voicemail, so calls will transfer to another SPOC if the assigned one is unavailable.
• There is a second review of all received borrower documentation to verify it is complete; approved or denied workouts similarly receive a second review.
• The SPOC notifies the borrower of workout approvals and denials both verbally and in writing; the SPOC also performs follow-up on missing documents, trial payments, etc.
• An individual in the loan operations group completes any system changes affecting loan modifications, and another person performs a second verification review.
• All processing, closing, and underwriting functions are centralized.
• Monitoring of 10 calls per loss mitigator.
• A manager oversees any mediation hearings.

Foreclosure and bankruptcy

Staff handles both foreclosure and bankruptcy functions. The department performs at least three reviews of the account while it is in foreclosure to determine whether it is subject to the requirements of the Servicemembers Civil Relief Act. The department mainly uses a vendor for foreclosure referrals; the vendor refers cases to its attorney network and grades their performance monthly. PHL's vendor management group, in turn, grades the vendor. Management reviews pre-foreclosure checklists completed by staff to ensure all loss mitigation and collection efforts were exhausted before legal referral and performs a similar review before foreclosure sale. Staff follows what we believe to be prudent foreclosure and bankruptcy practices, including:

• Electronic case referral.
• An approximate 19% foreclosure cure rate.
• Bankruptcy notifications are received through Banko (a Lexis Nexis application).
• Bankruptcy payments are posted in cashiering, which electronically requests instructions as applicable.
• PHL now grades attorney performance via a monthly scorecard instead of grading performance quarterly.
• The manager and QC department perform monthly QC reviews of staff.
• Staff now prepares the proof of claim (POC); previously the attorney completed this.
• No rejected or disputed POCs, which is similar to its peer group.

REO

One individual oversees REO marketing functions as there are only a small number of REO accounts at the present time. For private client REOs, PHL uses a vendor system for workflow processing, and management may use it for the entire portfolio in the future. PHL also has a relationship with another third-party provider to handle REOs should the portfolio increase substantially. The company noted the following statistics and controls in its REO process:

• Financial incentives are used to encourage the borrower to vacate the premises without initiating a prolonged eviction action.
• Two valuations are required to formulate a list price.
• The realtors provide monthly status reports.
• Average marketing time is 131 days.
• Gross and net proceeds to market value average roughly 92% and 84%, respectively.
• The average loss severity is 26%.

Because PHL's volume of REOs is currently low, it does not have a formalized grading mechanism to assess broker performance. We have observed that companies with larger REO volumes do assess broker performance on a monthly basis. A dedicated individual outside of the department is responsible for repairing any properties (primarily VA loans) acquired by PHL, who subsequently rents the property to maximize cash flow.

Financial Position

The financial position is SUFFICIENT.

Related Criteria And Research

Related Criteria

• Revised Criteria For Including RMBS, CMBS, And CMBS Servicers On Standard & Poor's Select Servicer List, April 16, 2009
• Servicer Evaluation Ranking Criteria: U.S., Sept. 21, 2004

Related Research

• Select Servicer List, June 2, 2017
• Planet Home Lending LLC AVERAGE Primary And Special Servicer Rankings Affirmed; Outlooks Are Positive, May 12, 2017
• Servicer Evaluation: Planet Home Lending LLC, May 12, 2016

Servicer Analyst:	Steven L Frie, New York (1) 212-438-2458; steven.frie@spglobal.com
Secondary Contact:	Jason Riche, Dallas (214) 468-3495; jason.riche@spglobal.com
Analytical Manager, North America Servicer Evaluations:	Robert J Radziul, New York (1) 212-438-1051; robert.radziul@spglobal.com