Fitch Eyeing Third-Party Loan-Level Reviews

Fitch Ratings said it will now seek and evaluate third-party loan-level reviews on all residential mortgage pools it is asked to rate in order to better identify poor underwriting practices. The ratings agency said the reviews will be conducted by a "due diligence" company prior to Fitch providing ratings on the transactions. Fitch said an independent company with no ties to the loan originator, the issuer of the notes, or the security underwriter must be used in conducting reviews. Companies conducting reviews also "will need to have the appropriate company and management experience for the type of loans being reviewed and have the procedures and controls, staff experience levels, technology, and tools to adequately conduct and report on the reviews," the ratings agency said.