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Private-label loan-vetting comes up short

HW+ Private-label loan-vetting

The process of vetting loan pools assembled for private-label securitization deals is, to a degree, like sausage-making. 

Few take the time to understand the process, but everyone eating the sausage wants to trust that the ingredients won’t cause them heartburn.

A recent report by the Kroll Bond Rating Agency, however, raises a yellow flag about current loan-review practices in the private-label market that requires examination of the sausage-making. As part of that, it’s important to understand that the due-diligence reviews performed on loan pools assembled for securitizations often make use of a process called loan sampling. 

The concept is simple: details ⇒

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