-Consolidated Analytics completed an independent due diligence review of agency-eligible residential mortgage loans originated or acquired by Flagstar Bank.-

Background and Landscape

Securitization of mortgage loans is subject to stringent obligations for credit qualification and regulatory compliance standards and requires an independent third-party due diligence assessment for eligibility and risk grading. RMBS issuers and underwriters engage independent third-party review (TPR) firms at the requirement of credit rating agencies and investors to validate the eligibility of loan participation based on standards created by federal regulations such as the Dodd Frank Act and standards for independence, data quality, property valuation, and defect grading.

Additionally, the need for independent reviews is critical as external factors can create risk for RMBS issuers and investors. Risks range from property condition and valuation-related exposure resulting from natural disasters (e.g. hurricanes and tornadoes), uncertainty related to trade policy and interest rate risk, or unforeseen events and global crises (e.g. COVID-19) that may tip the market downward or generate instability.