Before we’ll purchase any loans from an originator, we do a due diligence review of the originator’s origination and asset management processes. This is critical for us to understand, as by taking on a loan or a fractional loan from an originator, we’re not just taking on the risk of the borrower not repaying. We also take on the business risk of the originator’s processes.
When we do our due diligence on an originator, one of the first things we look at is their lending procedures. This includes looking at:
Credit Policy – Understanding how the originator evaluates borrowers and properties.
On the borrower evaluation front, we look at factors including but not limited to:
On the property evaluation front, we look at:
Asset Management/Mitigation procedures
Review of any third parties used, such as servicers and appraisal firms
Once our due diligence is complete and the lender meets our standards, we’ll start looking at their loans.