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Mortgage Due Diligence
Due Diligence Services
We firmly believe that quality due diligence that goes beyond the historic "check the box" review is the most prudent way to assess risk and accurately
price mortgage assets.
Our due diligence product offerings include:
- Full due diligence underwriting
- Credit, compliance, and fraud reviews
- Warehouse line consulting/audits
- Compliance reviews
- Distressed asset reviews
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- Forensic due diligence
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- Repurchase reviews/demands and counterparty workout strategies
- Loss mitigation strategies
- Quality control audits
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- Portfolio assessment
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Mortgage Due Diligence
Purchasing residential mortgages presents opportunities, but only if the risks are understood, managed and appropriately priced.
Due diligence engagements include the following fundamental areas of review:
Sampling
CrossCheck believes that a meaningful level of due diligence review can and should be conducted on 100% of loans in a transaction. However, where only a sample is to be reviewed, CrossCheck will perform or assist with the sampling methodology (stratified, random, statistical), criteria for selection, and sample size. Sampling methods should factor in the lender's past performance.
Personnel
Procedures and controls are only as good as the people managing and executing the process. We hire only experienced professionals that possess the tools, methodologies, and hands-on experience to thoroughly assess the most challenging underwriting situations. Our professionals average 15 years of underwriting and compliance experience. We staff engagements with analysts that possess the appropriate product experience, and the necessary collateral, fraud, and compliance training.
Data Integrity
The quality and accuracy of the data gathered is essential to the due diligence process, as well as the transfer of the assets involved. CrossCheck will thoroughly examine the method of data transmission to the underwriting group and, if electronic, procedures to ensure accuracy and correlation with the actual documents.
Credit
As credit remains the most predictive indicator of a mortgage assets future performance, CrossCheck believes that a comprehensive review of the credit, loan documentation, and credit decision made is the essential part of the due diligence process. Procedures must be in place to verify the accuracy of the credit documents and to validate that the lenders internal credit policies and procedures were followed. Our credit review process includes a detailed examination of the following:
- Application (1003)
- Credit Report
- Income/Employment
- Assets/Reserves
- Grading Accuracy
- Internal Policy Adherence
The goal of our collateral review is to determine marketability and value of the subject property as well as verifying that the appraisal report is in compliance. We accomplish this goal by combining our analyst experience with the following tools:
Automated Valuation tools – the use of AVMs and statistical analysis has become a commonly accepted practice in the mortgage industry. These tools provide the necessary tools and data needed to assist an underwriter in determining marketability and value. These tools can also act as a filter to help determine which mortgage files will require a more senior reviewer.
Appraisal Review Checklist – a comprehensive checklist put in the hands of an experienced underwriter will always lead to a confident analysis of the value and appraisal report.
Compliance
Our compliance review begins with running the mortgage asset through an automated compliance tool, which identifies any potential violations to all local, state, and federal regulations that would apply. Our underwriters then review the results, and complete the review checking documents (dates, signatures, missing docs) and resolving any open items from the automated review.
Fraud
Because misrepresentations cannot be underwritten or priced, any due diligence requires a thorough fraud review. Our fraud review typically takes a two-tiered approach. Initially we run all loans through a high-level analytical tool. Our experts use the output of these tools to identify higher risk loans, which are then submitted to a deeper fraud review by our experienced professionals.
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