Residential mortgage loan investors need analytical loan level due diligence reviews of newly originated loans to capitalize on investment opportunities. AMC is an industry knowledge leader in acquisition reviews of performing loans. Leveraging AMC's extensive experience and proven track record of success helps clients mitigate business risk and improve overall financial performance.
AMC's Full Residential Performing Loan Due Diligence Review Scope includes the following:
- Credit Review
- Compliance Review
- Pay History (seasoned loans)
- Fraud Review
- Data Integrity
AMC's credit review evaluates many factors, including the borrower's current ability and willingness to pay using a detailed review of the borrower's income and assets.
AMC's compliance review of the loans is to determine, to the extent possible and subject to the caveats below, whether the loans comply with: (i) disclosure requirements of the Federal Truth-in-Lending Act ("TILA"), as amended by HOEPA, 15 U.S.C. §1601 et seq., as implemented by Regulation Z, 12 C.F.R. Part 226; (ii) Section 4 of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. §2603, as implemented by Regulation X, 24 C.F.R. Part 3500; (iii) Fannie Mae points and fees limitations and HOEPA restrictions as addressed in Fannie Mae Announcement 04-06; (iv) disclosure requirements and prohibitions of Section 50(a)(6), Article XVI of the Texas Constitution and associated regulations; and (v) disclosure requirements and prohibitions of the various state, county and municipal laws and ordinances to protect against predatory lending.
We assign an overall "Compliance Event Level" indicating the conformity of each loan with respect to Federal, State, County, and Local High Cost and/or Anti-Predatory Laws. The results are indicative of the lender's overall regulatory compliance, which AMC checks versus its dynamic system of compliance reviews and testing.
A key component of due diligence for seasoned loans is the examination of payment histories. A review of the pay history is utilized primarily to determine cash flows, cash velocity, last payment received, payment string, and next payment due. AMC verifies payments are made to the account on time and that these payments are properly applied. AMC also verifies that escrow, late, and servicing charges are collected when required.
A well-executed fraud review can assist purchasers in pricing loans competitively. AMC fraud review checks borrower and loan information to detect and prevent fraud. Included in the review is a comprehensive background check and data verification of borrower and third parties including, but not limited to, brokers, appraisers, and builders.
BPO's and/or AVM's are likely to be required for all reviews to support indicated values and meet general secondary marketing expectations. These evaluations help to determine the condition of properties, market appeal, and marketing timeframe.
Data from the origination appraisal will be gathered to assist the client in performing value reconciliation between their new BPO's (and/or AVM's) and prior appraisals. AMC will look at numerous valuations available and consider such factors as prior sale dates, sales prices, and square footage to determine the value marketability of the collateral and whether it supports the amount of the obligation.
The accuracy of data provided on the tape must be found to be acceptable with all discrepancies noted and reported back to the purchaser. Particular areas of focus include: debt to income (DTI), loan to value (LTV), lien position, FICO scores, property type, and documentation type.