Digital Risk Calls On Industry To Launch Due Diligence Task Force

Posted by Orb Staff on May 10, 2012 No Comments
Categories : Residential Mortgage

11517_digital_risk Digital Risk Calls On Industry To Launch Due Diligence Task Force Digital Risk LLC, a New York-based provider of mortgage risk, compliance and transaction management solutions, has called for the creation of an industry task force to develop standards and requirements in mortgage risk due diligence.

The company calls for ratings agencies, due diligence firms, deal sponsors, originators and investors to come together and agree on standard practices to improve transparency and confidence in underwriting, fraud and regulatory compliance, particularly reform efforts relating to the Real Estate Settlement Procedures Act. Without such standards, the company says, private capital will continue to ebb from the residential mortgage-backed securities market and, furthermore, the industry may face additional government regulation.

The company adds that it is working in conjunction with banks, rating agencies and other industry organizations to spearhead an exploratory committee, which is expected to convene in the coming weeks to begin setting new standards and creating a process to monitor progress, including regular and periodic review meetings.

‘While there is market pressure to loosen lending standards, without a true understanding of risk elements, the certainty lenders require cannot be achieved and mortgage capital will remain limited,’ says Peter Kassabov, Digital Risk's CEO. ‘A standards body would not only restore confidence in underwriting procedures, it will help the mortgage lending industry feel more confident that it has actionable, reliable data to make quality lending decisions. As an industry, we need to proactively act to develop reliable and stringent standards that will provide full transparency and improve underwriting protocols without government intervention.’

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