KBRA Comments on Trimont LLC’s Proposed Assumption of WFCMS Servicing Rights

Trimont LLC (Trimont) signed an agreement on August 19, 2024, with Wells Fargo Bank, N. A. (Wells Fargo), to acquire Wells Fargo’s third-party commercial mortgage servicing business (WFCMS), with the transaction expected to close on or about March 1, 2025. The pending transaction will include the transfer of the master, primary, and special servicing duties in commercial mortgage-backed securities (CMBS) conduit and single-asset single borrower (SASB) transactions, commercial real estate collateralized loan obligations (CRE CLO), and master and special servicing duties in Freddie Mac K-series, K-deal, Q-deal, or ML-deal securitizations, as well as the primary servicing of third-party warehouse loans. Trimont’s post-acquisition CMBS portfolio will include over $400 billion of master servicing and/or primary servicing, plus over $70 billion of special servicing.

The acquisition will include the transfer of almost all WFCMS full-time employees based in the U.S. and India, a small group of divested Wells Fargo technology and compliance support staff, and certain software systems related to proprietary servicing under a 12- to 18-month transition services agreement. The acquisition will leverage a “lift and shift” strategy, according to Trimont. Senior leadership integration will take place upon closing, but both servicing platforms will operate relatively independently, with minimal changes in the near term.

KBRA currently rates more than 263 transactions where Wells Fargo is the primary, master, or special servicer. KBRA has previously reviewed Trimont and WFCMS in accordance with its Commercial Mortgage Servicer Review Process. We most recently reviewed WFCMS in May 2024 for primary, master, and special servicing, while Trimont LLC was reviewed in December 2024 for primary and special servicing. In connection with the pending transaction, KBRA completed a review of Trimont’s post-acquisition master, primary, and special servicing capabilities, which considered, among other things, post-acquisition management, governance and organizational structure, pro forma financial statements, and servicer advancing duties.

KBRA determined that post-acquisition, Trimont will possess the necessary capabilities to fulfill the contractual obligations of the servicing agreements associated with the 263 KBRA-rated transactions, and to satisfy the servicing standard in accordance with industry practices. Although the post-acquisition entity does not have investment-grade credit characteristics, each of the rated transactions has another entity that is responsible for acting as a back-up advancing agent should Trimont, as the advancing agent, not be able to perform on its obligations. These back-up advancing agents all have investment-grade credit ratings and serve in one or more roles as a trustee, note administrator, or collateral agent. The entities include Citibank, N.A; Computershare Trust Company; Deutsche Bank National Trust Company; U.S. Bank N.A.; and Wilmington Trust Co. The back-up advancing arrangement is sufficient to continue to support the advancing function in the transactions.

As a result of its review of the post-acquisition entity, KBRA determined that the acquisition, in and of itself, will not result in a downgrade, qualification, or withdrawal of any of the approximately 3,300 KBRA ratings that are outstanding across the 263 aforementioned transactions.

About KBRA

KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.

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