In the latest sign of trouble at Accredited Home Lenders, Fitch Ratings said yesterday that it has downgraded the company’s residential primary servicer rating for subprime product to ‘RPS3-‘ from ‘RPS3+’. Fitch said its rating action reflected the challenging operating environment in the subprime mortgage market and uncertainties over Accredited’s ability to maintain adequate funding and remain viable over the intermediate term. Servicer ratings downgrades can be a significant problem for mortgage lenders like Accredited, as a ratings drop may lead to a violation of servicing covenants in place with the company’s creditors. New Century recently disclosed that ratings downgrades by Moody’s at Fitch caused numerous creditors to pull servicing rights from the troubled Irvine, Calif.-based subprime lender.
