S&P ups Freedom Mortgage

S&P said it upgraded the ratings for Freedom Mortgage Corp. and its senior unsecured notes to B from B-. The recovery rating on the unsecured notes is 4, reflecting an expectation for average recovery (45%) in a default scenario.

“Our upgrade follows our expectation that Freedom will continue to benefit from low-interest rates with strong originations and earnings. While our base-case expectation is that refinance volume and gain on sale margins will be lower in 2021 than in 2020, we still expect the company to generate higher earnings and profitability than in 2019, maintaining adjusted debt to EBITDA below 4x. Over the longer term, we expect leverage to normalize between 4x and 5x as interest rates rise and origination volumes subside,” S&P said in a press release.

The outlook is stable.

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