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Vendor Aids ARM Deals

Santa Ana, CA-First American Outsourcing and Technology Solutions here has developed a new auditing solution designed to reduce the cost and risk of servicing, acquiring and selling adjustable-rate mortgage loan portfolios.

The solution identifies data issues with existing ARM portfolios and can "scrub" loan-pool acquisitions during the transfer and boarding process or as pre-sale due diligence. Unlike competitive auditing programs that only identify data issues, the new service can correct errors uncovered by the audit and re-post the changes to the servicer's system. Specifically, the solution can re-amortize and repair loan files and customer histories and automatically generate corrected borrower loan statements.

Due diligence and pre-acquisition or pre-sale scrubbing "industrywide is as much as $350 billion of unsecuritized ARMs and are still held in portfolios," said Scott Brinkley, executive vice president of First American Outsourcing and Technology Solutions. "Whether they are traded or retained by the servicer, there are significant data issues that can result in incorrect rate adjustments, defaults, foreclosures and lawsuits. Our approach reduces compliance and loan performance risk for portfolios in both the pre- and post-acquisition stage.

"By detecting errors at the front end of the sales process, they can be corrected prior to transfer and boarding, reducing cost and risk for the acquirer."

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