Due Diligence
COUNTERPARTY RISK
Operational Platform Review & Assessment
Consolidated Analytics’ Counterparty Risk solution provides operational platform reviews and assessments of counterparties to determine their ultimate suitability for our institutional investors, banks, investment firms, and correspondent aggregator clients. Our counterparty risk reviews cover warehouse financing and renewals, non-agency and Non-QM whole loan acquisition, business purpose lending whole loan acquisitions, and correspondent approval and recertification.
- Onsite interviews with key management personnel
- Alignment of personnel, operational infrastructure, and system capacity with business development and growth strategies
- Assessment of underwriting and credit risk policies and procedures
- Review of appraisal policies and compliance with AIR and USPAP standards
- Evaluation of closing and funding controls and fraud prevention tools
- Review of compliance framework and associated loan-level controls
- Assessment of pre and post-closing QC processes, sampling methodologies, and results
- Review of servicing portfolio and sub-servicing oversight procedures, as applicable
- Evaluation of pricing and hedging strategies and controls
- Onsite interviews with key management personnel
- Assessment of credit risk philosophy and conformance with Ability to Repay (ATR) standards
- Assessment of staff experience and capacity
- Evaluation of historical loan performance
- Review of valuation controls and appraisal standards
- Evaluation of credit and price exception procedures
- Check of system controls, loan decisioning, and reporting tools
- Onsite interviews with key management personnel
- Assessment of operational infrastructure and systemic controls
- Evaluation of credit risk philosophy and borrower experience standards
- Review of procedures to substantiate budget and cost of improvements
- Review of the appraisal process, including the scope of work and determination of after-repair values
- Evaluation of closing and funding controls and fraud prevention tools
- Assessment of the rehab process, including property inspections, draw approval, and disbursement procedures
- Telephonic interviews with key management personnel
- Review organizational requirements, including years in business, staff experience, etc.
- Assessment of compliance management framework, including appraisal independence requirements, QC, and data security standards
- Conformance with financial requirements such as Tangible Net Worth (TNW) minimums, profitability covenants
- Review of investor scorecards to evaluate historical production and loan performance trends
- Additional services may include the creation of internal scorecards to evaluate production trends, manufacturing quality, and loan performance vs. peers