Due Diligence Services

Our Process

We specialize in simple. Our process—as shown below—is logical, transparent, easily adapted to your needs, and responsive to changing circumstances:

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Markets Served

Although our due diligence services are fully customizable to fit exact needs—no matter what they are—we have historically focused on the following mortgage-related markets:

 

• Investment (Banks, Hedge Funds, Investors)
• Finance (Originators, Lenders, Servicers)
• Insurance (Insurers, LCDS Counterparties)
• Regulation (GSEs, Federal Agencies, State Bureaus) 

 

 

Technology Matrix

Our Due Diligence Services utilize, as needed, specialized technologies developed by The Bohan Group, ComplianceEase, First American CoreLogic, and First American CREDCO. Alone or together, they automate much of our due diligence process:

• BRAIN® Platform
  Our proprietary risk analysis and valuation platform, BRAIN (Bohan Risk Analysis Information Network) automates due diligence, producing fast, accurate results.
• LoanSafe®
  The industry-standard mortgage-risk analysis tool, LoanSafe rates loan-level portfolio risk multi-dimensionally—scoring loans for collateral, borrower, and broker risk.
• TrueLTV™
  To assess the current influence of HELOCs and other active seconds on portfolio value, TrueLTV uncovers all details, summarizes likely ongoing impact.
• GeoAVM Cascade™
  Using geo-preference sorting, GeoAVM Cascade auto-selects the optimal AVM to evaluate each property in a portfolio, producing optimally accurate results.
• ValuePoint4 Default™
  Designed to auto-evaluate a portfolio’s distressed collateral, ValuePoint4 Default employs advanced neural-net methodology to determine value in troubled markets.
• ComplianceEase®
  An expert-systems technology, ComplianceEase automates transaction-level, up-to-the-minute, multi-jurisdictional portfolio compliance reviews.
• First American CREDCO™
  First American CREDCO is a leading U.S. credit data repository, providing instant credit assessment capabilites to portfolio risk-management and auditing applications.

 

 

Suite of Services

Credit Services

• Credit Underwriting
• Instant Merge
• Rapid Recheck
• Account Monitoring
• Portfolio Credit Review
• Borrower Income/Credit Scores
• Credit Fraud Detection/Deterrence

Collateral Services

• Portfolio Evaluation Review
• Open Lien/Current LTV Review
• Scratch & Dent Review
• Non-Performing/REO Asset Review
• Fraud Detection and Deterrence
• Collateral Risk Management

Compliance Services

• Regulatory Compliance Review
• Predatory Lending Compliance
• Repurchase–Rep & Warrant
• GSE Compliance Review
• HUD/Patriot Act/OFAC Compliance
• Red Flags Compliance
• Legal and Quality Control Review

 

 

Services in Detail

Credit Services

 

Credit Underwriting
Our credit underwriting due diligence teams are led by experienced deal managers, with each team including a lead underwriter to manage the process, a quality control underwriter to ensure data consistency, and credit underwriters who individually focus on verifying documentation, performing credit analyses, confirming data accuracy, and assuring regulatory compliance.

 

 

Instant Merge
Instant Merge is a “soft-inquiry” merged credit reporting solution, combining credit data from one, two, or all three national credit bureaus into a single report in a common format. By providing an accurate, balanced representation of your borrower’s credit history using only the most up-to-date credit information, Instant Merge performs quick, comprehensive borrower due diligence.

 

 

Rapid Recheck
Rapid ReCheck speeds up bureau-level credit updating of national repository records—including FICO scores—so you can quickly verify/ammend credit scores during the due diligence process. Since Rapid Recheck recalculates key scores using the latest credit bureau information updates, it can be used to isolate the impact of borrower credit on portfolio performance metrics.

 

 

Account Monitoring
Our credit risk monitoring service improves the performance of securities by tracking deal performance over time, identifying issues, and resolving problems. We examine prepayments, delinquencies, roll rates, cure/resolution rates, defaults, losses, and value volatility, identifying what’s worked to improve value in the past and what can be improved in the future.

 

 

Portfolio Credit Review
The Portfolio Credit Review (PCR) provides a complete credit overview of your portfolio, including credit score ranges, average scores, and percentages of borrowers in certain score ranges. PCR showcases only essential data, speeding portfolio value determinations for acquisition, sale, or investment. Based on real-time data and analytics, PCR uses only the most current information.

 

 

Borrower Income/Credit Scores
FICO scoring alone is insufficient to predict borrower capacity to repay loans. Using IncomePro, our income validation tool, this in-depth portfolio review combines results from the three main salary databases with borrower salary-progression, occupation, job pattern, and FICO scores, to provide objective analysis of your portfolio’s overall borrower-repayment capacity.

 

 

Credit Fraud Detection/Deterrence
Credit Fraud services can determine a loan portfolio’s level of credit risk, analyzing borrower data enhanced for credit status (accounts, balances, payment status) then flagging loans when that and other monitored data passes client-set threshold levels for ownership changes, property flips, payments, identity, PATRIOT Act and OFAC restrictions, domestic and international watch lists.

 

 

Collateral Services

 

Portfolio Evaluation Review
Our portfolio evaluations of internal assets or potential acquisition targets use a comprehensive, tailored, holistic toolset—services and software custom- allocated to include only what you actually need—speeding the process by automating as much as possible. In less than 24 hours, our portfolio audits can shrink costs by reducing BPOs and clarifying “buy/no-buy” decisions.

 

 

Open Lien/Current LTV Review
Using BRAIN technology and TrueLTV, we focus assessment of your portfolio on the impact of secondary liens on loan-level and overall values—updating risk levels by including current lien counts/amounts, lien positions in repayment order, estimates of collateral market values, equity balances and CLTVs, ARM terms/interest rates, pre-foreclosure or foreclosure activities.

 

 

Scratch & Dent Review
One of the most inviting acquisition targets in the current mortgage marketplace, scratch & dent loan portfolios offer significant profit opportunities. Our uniquely fast, focused portfolio reviews of distressed, delinquent, and poorly written loans are designed to give buyers current risk/value assessments that are comprehensive and timely enough to provide real competitive edge.

 

 

Non-Performing/REO Asset Review
Our non-performing/REO asset reviews are the flip side of scratch & dent reviews (see above): a fast, accurate way for banks and other asset sellers to assess current risk/value in distressed loan portfolios—then, continuing an automated audit process over time, regularly updating the data to help overcome current investor perceptions of uncertainty in bank-asset valuations.

 

 

Fraud Detection and Deterrence
As widespread as mortgage fraud was suspected to be prior to the current financial meltdown, it is proving in fact to be far worse. Using BRAIN technology and LoanSafe—our proven, industry-leading fraud discovery and deterrence tool—we audit your portfolio for fraud-risk indicators (borrowers, agents, geography, appraisals, pricing, market conditions, EPD/loss severity, etc.).

 

 

Collateral Risk Management
After initially determining a pool or portfolio’s collateral mark-to-market value, we can automate a long-term, iterative collateral performance audit. Our risk management tools stratify collateral into risk gradients, identifying any that have fallen below defined thresholds for corrective attention. Since we audit complete loan pools, not just sample loans, we never miss the bad apples.

 

 

Compliance Services

 

Regulatory Compliance Review
We use ComplianceEase to determine quickly if loans in your portfolio meet requirements of Fannie Mae, Freddie Mac, Ginnie Mae, FHA, VA, FHLB, secondary market investors, and regulators. ComplianceEase can can be customized to fit your evolving needs, including third-party origination risk analysis and review of your policies, procedures, and controls.

 

 

Predatory Lending Compliance
The proliferation of high-cost/anti-predatory laws and ever-changing state consumer lending regulations have shifted much regulatory compliance from traditional sampling/manual reviews to an automated, transaction-level approach. Our ComplianceAnalyzer® automates assessment of your portfolio’s loan-level PL compliance and generates detailed reports—all in just seconds.

 

 

Repurchase–Rep & Warrant
Portfolios built when low rates and rising home prices drove the market often relied on seller’s reps & warrants that loans complied with all applicable laws—or they would repurchase the loans. We can quickly determine which of the loans covered by the original rep & warrant actually complied with the laws as warranted and which must be repurchased.

 

 

GSE Compliance Review
ComplianceEase GSE compliance reviews include up-to-the-minute regulatory updates—like the Home Valuation Protection Program recently established by Fannie Mae, Freddie Mac, and the Office of Federal Housing Enterprise Oversight (OFHEO), which mandates significant changes to the real estate appraisal process, including appraisal compliance with regulatory standards.

 

 

HUD/Patriot Act/OFAC Compliance
First American CREDCO’s ProScan OFAC Compliance tool automatically checks all borrowers in a portfolio to ensure that none have been identified as taking part in terrorist financing. Quickly and automatically, it provides documentation showing compliance with the USA PATRIOT Act’s Customer Identification Program (CIP) and the Office of Foreign Assets Control (OFAC) rules.

 

 

Red Flags Compliance
First American CREDCO’s Red Flags Compliance is designed to help U.S. lenders and brokers comply with the Red Flags Rule, the FTC’s new regulation requiring finance and credit institutions to develop programs to combat identity theft. Our compliance solution combines fraud analysis, identity verification, and Fair and Accurate Credit Transactions (FACT) Act fraud alerts.

 

 

Legal and Quality Control Review
Using quality-focused BRAIN QC automation, our legal and quality portfolio reviews quickly identify collateral compliance with federal, state, county, and municipal regulations, statutes, and ordinances—including all the latest legislative and regulatory updates—plus relevant GSE and rating agency standards, current market practices, and internal company guidelines.