How Investors Can Mitigate the Risks of Residential Mortgage Investments: SitusAMC White Paper

While the residential mortgage industry has made great strides in addressing documentation standards since the Global Financial Crisis, challenges still occur across the loan lifecycle — especially given the mushrooming size of loan files, which now average at least 750 pages. For investors in residential mortgage loans, documentation quality poses critical risks: 

• Loan file completeness issues can delay transactions, increase costs, and add potential legal complications for investors, particularly when documentation is missing or defective.   

• Missing documentation on loan files requires time and resources to cure.  

• Defective and missing documents may become an impediment to asset recovery in the event of foreclosure driving increased loss severity. 

“Documentation review is not merely a compliance exercise, but a fundamental component of risk assessment and management when investing in residential mortgages,” said Mike Margolf, Managing Director, Secondary Market Technology for SitusAMC. “The right mortgage document management, classification and data extraction platform can help mitigate all of these issues, helping investors better protect their interests and optimize the performance of their assets.” 

SitusAMC's new white paper, “Mitigating Documentation Risks When Investing in Residential Mortgages: 4 Considerations When Choosing a Technology Platform” explores how technology can help mitigate risk, giving investors the ability to: 

• quickly understand what documentation received and what is retained in inventory; 

• use extracted data to support comparisons to seller, transferor, and inventory data in order to evaluate accuracy;  

• efficiently organize and access mortgage documents, ensuring transparency and accessibility across a portfolio; 

• accelerate transactions by facilitating swift sharing and secure document access; 

• maximize profitability by streamlining procedures and minimizing costs; 

• improve operational efficiency and enhance accuracy in mortgage operations, helping to mitigate risk. 
  

“To improve quality and accuracy, the automated document platform should be purpose-built for the residential mortgage industry,” Margolf said. For example, SitusAMC’s Acuity document suite has a document classification engine powered by both optical character recognition (OCR) and artificial intelligence (AI) technology to recognize, learn from and extract data from mortgage documents. In 2024, more than 3.3 billion pages were processed by the application, which can recognize more than 500 document types and 1,100 data fields with greater than 90% accuracy. 

Download our white paper, “Mitigating Documentation Risks When Investing in Residential Mortgages: 4 Considerations When Choosing a Technology Platform” today. Learn more on our website about SitusAMC's Acuity document management, classification, and data extraction technology, which is purpose-built for the mortgage industry, powering loan origination, file review, servicing, and asset management.