Knowledge Center

Counterparty Assessements Drive Differentation

-Evaluating Both Risk & Opportunity-


Background & Landscape 

The mortgage landscape has become increasingly regulated which has further compressed margins in a highly volatile and competitive industry. As a result, lenders struggle to compete in this environment, they are expanding credit guidelines and product offerings which could present risk to their institutional investors.  As more lenders become increasingly overwhelmed with regulatory pressure and market volatility, institutional investors often struggle to identify and maintain prudent counterparty relationships. Identifying strong counterparty partners not only protects clients interests by mitigating economic, operational, and reputational risks but enables differentiation in a competitive environment.

About the Client

The client is a major institutional investor offering warehouse financing and whole loan acquisition options to Retail, Wholesale, and Correspondent lenders nationwide. The client sought to expand mortgage financing solutions to include Non-Agency, Non-QM, and business purpose warehouse offerings, however, its previous reviews were limited offering only high-level information, leaving the institution at risk. With limited subject matter expertise within related mortgage operations, credit and underwriting, and technology and workflow considerations, the client hired Consolidated Analytics to assess prospective counterparties and provide an assessment regarding risks associated with their new product offerings.

Solution Highlights

Consolidated Analytics provided initial counterparty assessments and ongoing monitoring which mitigate related operational and compliance risks and allowed the client to more comfortably enter new spaces within the market, e.g. Non-Agency financing, Non-QM whole loan acquisition, business purpose financing options (e.g. fix and flip, long term, rentals, etc.). Consolidated Analytics’ Counterparty Assessment provided the client a more detailed view of its operations through the lens of an industry expert. Consolidated Analytics leveraged several mediums including onsite interviews, review of counterparty provided materials and industry-specific resources to conduct a comprehensive assessment of the organization’s operational health, related strengths and weaknesses of critical functional areas of the business, and the ultimate viability of the entity as a business partner for our client.

The client specifically benefited from the following three features of the review:

  • Data-Driven
    Consolidated Analytics aggregated qualitative and quantitative data points, highlighting counterparty strengths and potential areas of concern as a mortgage originator/aggregator. We leveraged data from a broad range of internal and external, publicly available sources (loan QC, CFPB, litigation, Google, etc) to uncover and quantify risk and opportunity for the client, giving them the intelligence required to make informed business expansion decisions.
  • Extensive Research
    We delivered an extensive review of due diligence materials requested from the counterparty and conducted a series of onsite interviews with the organization’s Senior Management team. Our extensive research and review component allowed us to compare management’s understanding and knowledge of best practices and processes with documentation, materials, and performance numbers. Additionally, a thorough review of all functional area of the business enabled an upstream and downstream analysis of performance impact.
  • Ongoing Monitoring
    Consolidated Analytics identified opportunities for ongoing counterparty monitoring for specific processes, workflow and operations which presented greater risk to the organization. The identification of ongoing monitoring opportunities further protected our client’s interests and mitigated operational, economic, and reputational risks through the duration of the business relationship.


After thorough review of pre-due diligence materials requested from the counterparty and a series of onsite interviews conducted with the organization’s Senior Management team, Consolidated Analytics aggregates qualitative and quantitative data points, highlighting counterparty strengths and potential areas of concern as a mortgage originator/aggregator. The information is collated into a holistic report offering an overall assessment of the counterparty, in addition to reviews of each functional area of the business which is delivered to our client within two weeks of performing the onsite review. As a result of the assessment, the client achieved:

  • Final Comprehensive Report offering ease of use and clear explanations of results
  • Clear data on risks and opportunities within its operations, portfolios, people, processes, and public reputation
  • Insights that support or challenge the company’s business expansion plans
  • Identification of vulnerabilities and recommendations for improvement, corrective action

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