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TEXT-S&P Revises Otlk On Juutaku Loan Servicer To Pos; Afms Ranking

(The following was released by the rating agency)

OVERVIEW

-- JLS primarily provides special servicing for residential loans that it receives from Japan Housing Finance Agency.

-- The company has a robust track record in residential loan special servicing.

-- The company is working to streamline operations, and continues to enhance internal controls.

-- The company conducts routine disaster recovery testing of its servicing systems.

-- We have revised to positive from stable our outlook on the servicer evaluation ranking on JLS as a residential loan special servicer, and have affirmed the ranking at ABOVE AVERAGE.

TOKYO (Standard & Poor's) Oct. 11, 2012--Standard & Poor's Ratings Services today said that it has revised to positive from stable its outlook on the servicer evaluation ranking on Juutaku Loan Servicer Ltd. (JLS) as a residential loan special servicer. At the same time, we affirmed the ranking at ABOVE AVERAGE. JLS remains on Standard & Poor's Select Servicer List in the above category.

JLS was established in August 2004 to conduct servicing operations as allowed under Japan's Law Concerning Special Measures for the Servicing Business (Servicer Law), which came into effect in February 1999. The Ministry of Justice licensed JLS as Japan's 91st servicer in December of the same year. JLS' main business activity is the special servicing of residential loans that it receives from Japan Housing Finance Agency (JHF; AA-/Negative/A-1+).

We base today's outlook revision and ranking affirmation on our view of the following: (1) the company's robust track record in residential loan special servicing; (2) its efforts to streamline operations by developing and using highly versatile computer systems to service various kinds of assets, and its execution of routine disaster recovery tests of these systems; (3) the progress it has made in analyzing loan collection data, and its ability to use that data to expand its business; and (4) its continued focus on enhancing internal controls.

Our outlook revision and ranking affirmation reflect an overall evaluation of JLS as a residential loan special servicer, based on our analysis and assessment of various factors, including the following:

-- The company's track record as a residential loan special servicer;

-- The servicing experience of its management team and staff;

-- Its detailed internal policies and procedures; -- Its business expansion plans; -- The implementation and results of its internal audits; -- Its implementation of internal controls; -- Its internal training programs;

-- Its disaster contingency plans, including data backup systems, and the execution of system resumption tests;

-- The quality and capacity of the computer systems that support the company's day-to-day business operations;

-- Its efforts to streamline servicing operations; -- Its ability to analyze and use loan collection data;

-- Its effective setup and boarding of loans that third parties originated;

-- Its cash management methods;

-- Its ability to report to investors and relevant parties; and

-- Its management of delinquent and defaulted receivables.

Standard & Poor's bases its servicer evaluations on an objective and comprehensive assessment of a servicer's operational capabilities for servicing various types of receivables and obligatory rights. Based on the assessment, we assign rankings in the following five categories: STRONG, ABOVE AVERAGE, AVERAGE, BELOW AVERAGE, and WEAK.

To be included in, or to remain on, Standard & Poor's Select Servicer List, servicers must, in principle, meet the criteria for attaining at least an AVERAGE ranking with a stable outlook.

RELATED CRITERIA AND RESEARCH

"Revised Criteria For Including RMBS, CMBS, And ABS Servicers On Standard & Poor's Select Servicer List," April 16, 2009

"Servicer Evaluation Ranking Criteria: U.S.," Sept. 21, 2004

Keywords: MARKETS RATINGS JUUTAKULOANSERVICER