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Up at Night: Risks of Sample Due Diligence

What is keeping Aggregators up at night? The risk of not performing due diligence on all loans being sold into securitizations.

Some entities only perform sample due diligence but are responsible for representation and warranty risk on the entire portfolio. The loan files not reviewed in sampling are all a huge question mark and many issuers are losing sleep over the quality of those files.

SitusAMC’s document classification technology Acuity can review every loan in the pool with no human intervention and determine if the files contain documentation that would alleviate some concern.  Identifying the presence of income and asset documents, credit reports, appraisals and other documents that would represent a verification of ATR was performed would mitigate the chance of securitizing assets that would not belong in a pool.

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