Our Risk Mitigation Solutions

With each client, Digital Risk analyzes the nature and scope of the risk mitigation problems, and recommends which set of tools are most likely to provide efficient and cost-effective solutions.

Investment Banks, Hedge Funds & Private Equity Firms – Acquiring & Selling Loan Portfolios

PortfolioReview offers time critical and accurate decision support solutions for investors, MBS security firms and portfolio traders who need to know a loan’s “right price,” based on projected future performance. As a comprehensive decision support solution, our system also this group to design proper credit enhancement and support structure of their MBS based on projected loan performance.

Our core services focus on identifying value, based on clients’ business-rules. We create a bidder/buyer portal through which data can be analyzed and the produce meaningful decision-making reports. The system includes summary reports, individual loan reports, scanned 3rd party documents that support findings and add credibility, representation and warranty analysis and deal letters and other legal document reviews. As a result, the investors have a central repository for portfolio data to be shown to market, with a user friendly portal. With reduced information uncertainty and increased creditability and transparency, investors can more efficiently seller deal with each potential bidder, reducing time to market and increasing speed of execution

In addition, Digital Risk can offer enhanced services, including:

• DTI and Credit updates
• Value determinations
• Compliance reviews
• Re-underwriting guidelines
• Serving analysis and
• Fraud Investigations

Mortgage-Backed Security (MBS ) Issuers

PortfolioReview provides MBS issuers with loss mitigation decision support. Our sophisticated predictive modeling tools verify loan data accuracy against the seller’s representations and warranties. It investigates credit, income, collateral and risks using RiskIQ technology.

As a part of the verification process our system validates loan data, at the time of origination/loan acquisition, and then compares to currently validated data. For example, collateral validations include: verification of current value and value at origination, and an estimate of the collateral value exposure. As a result, more qualitative analysis by type of defect; i.e., was the value decrease a function of misrepresentation at origination, a decrease of market conditions, or an error by non-qualified appraisal. Owner verification focuses on current occupancy and at origination, and checking the validity of borrower’s phone numbers, addresses, undisclosed properties, etc. For instance, high rates of property acquisitions may suggest fraud, while high debt-to-income ratios indicate greater probability of payment defaults. Verification of income representations involve comparisons with leading government and industry compensation data, offering the most accurate salary ranges available per borrower occupation and residence data.

Finally, additional analyses are performed concerning all parties involved in a loan process. For instance, to uncover evidence of collusions by originators, realtors, appraisers, loan officers or settlement agents, PortfolioReview makes comparisons between their performance and benchmarks, and their appearance on “Watch Lists.”

Decision-support risk analytics report on loan segmentation, exposure analysis and root cause analysis enable timely action to mitigate losses associated with these non-performing assets. They also suggest what corrective action the client should take, including re-purchase requests, foreclosure or fine tuning of purchasing/securitization guidelines. When the next logical step is additional verification using data not available within the databases, Digital Risk’s due-diligence team empowered with system tools engages in hands-on investigation to provide the resolution.

Mortgage Originators

Using RiskIQ, Digital Risk helps Mortgage Originators check that best-practices are being followed to minimize the risk of fraud and error. If you’re concerned with identify theft, IdentityIQ cross-references insurance, funeral home, and hospital records; if income is the issue, IncomeIQ provides uses government and industry leading HR compensation data to cross-check salary ranges against borrower occupation and residence data and analyze databases with Social Security Number income IRS tax return information. PropertyIQ provides one-stop access to all leading Automated Valuation Models. Appraiser, broker and loan officer license and risk analyses are also used to qualify loan transactions using information retrieved from lenders and industry standard lender-risk databases. Our RiskAnalytics reporting module provides a broad and highly customizable data warehousing capabilities set for full integration with client systems. Finally, Digital Risk can re-underwrite each mortgage loan against applicable underwriting guidelines and matrices.

Servicing Firms and Rating Agencies

Digital Risk adapts the tool set described for MBS securitization firms to meet the needs of Servicing firms and Rating agencies, and customizes PortfolioMonitor to monitor serviced loan portfolios and to recommend appropriate actions in case of early signs of non-performing assets. Based on its unique predictive modeling capabilities, and customized with both servicer and portfolio owner’s guidelines, our system can identify early signs of loan defaults. Using all available public and private data about a borrower’s financial health, employment stability, property value and various demographical factors plus, most notably, service system comments and loan history, PortfolioMonitor offers accurate risk assessment and provides recommendations to minimize investors’ financial exposure.