New Tool Provides Transparency

Shelton, CT-Servicers and specialty servicers alike are bracing up to face the challenges of a new year, including the revitalization of the securitizations marketplace.

Clayton Holdings LLC here, a provider of customized risk analysis, loss mitigation, specialized loan servicing, operational solutions and staffing services for the mortgage marketplace, is updating its systems to accommodate a new 16-digit loan identification code by the end of the first quarter of 2010.

Clayton will be actively supporting ASF LINC, the new universal loan identification code jointly developed by the American Securitization Forum and Standard & Poor's Fixed Income Risk Management Services.

Clayton Holdings will adopt the ASF/S&P loan identification code in 1Q 2010 as a way to further enhance data transparency throughout the mortgage process from origination to servicing securitized loans.

The code is designed to give investors greater information about the loans that are securitized in mortgage- and asset-backed transactions.

"The new code is an important step to providing the kind of transparency that will be needed to restart the nonagency securitization market," said Paul Bossidy, chief executive officer of Clayton Holdings.

"ASF Project RESTART seeks to increase transparency in the securitization markets by improving investors' access to important loan-level information," said ASF deputy executive director, Tom Deutsch.

"Implementation of the global ASF LINC is a critical milestone in striving toward this goal, as it will provide investors for the first time with the ability to track a loan throughout its life cycle."

"It will give investors an important new tool to track and analyze underlying collateral, much the way CUSIP numbers are used with bonds. Clayton has been working closely with ASF and Project RESTART, and this new code is one of the first deliverables of that initiative," Mr. Bossidy said.

ASF LINC loan identification system was designed primarily to provide loan-level data access for RMBS investors, regardless of when or where the assets were securitized, AFS said. But at the same time the program benefits servicers and other parties in the mortgage chain.

For example, the first two characters in the code depict specific loan type through easily recognizable abbreviations, such as RM for a residential mortgage or AU for an auto loan. Next, it features six characters for the loan origination date, followed by where the loan was originated. The final character in the code is an algorithmic check-digit, which is used to confirm that all other digits in the code are correct.

According to ASF, the global ASF LINC is linked to the CUSIP and/or ISIN number of the securitized product, "allowing investors to track the loan throughout its lifespan and provide a chain of accountability between loan originators and investors. "It also connects to information from third-party providers like credit bureaus.

Assigned at no cost to issuers, the ASF LINC is stored in a central loan data repository administered by S&P FIRMS. The goal is to create standardization and consistency in loan data reporting and monthly performance.

ASF stressed that ASF LINC "is not designed or intended to replace the primary servicer's loan number," but to allow users to track and monitor a loan throughout its life after the loan has been securitized.

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