Reviewing Collateral

[Jason Fuentes]

I working on closing my 1st note and wanted to reach out to the great folks of this forums for what to look for when reviewing files.  I actually have a professional service reviewing the mortgage files but the seller has also provided a slew of other documents.  Was seeking  input on what are the main things to look for.

Thanks in-advance .

[Paul Birkett]

Hi Jason

The collateral review falls into two parts:

Must Have: 

The Note - signed by the borrower(s), dated the same as the mortgage - all pages no missing data (origination date, pay-off date, interest rate, monthly P&I)

The Mortgage (or DOT) - signed by the borrowers, dated same as note

Assignment chain - can you follow the chain of ownership from the origination to today (if not, what assignments are missing)?

Alonge - transferring the ownership of the mortgage alongside the note. 

Your custodian or document remediation service will fix and gaps (but absolutely must have the note and mortgage (or a copy note and lost note affidavit).

Nice to have: All the origination documents. Application form, back-up file etc This is often called the working file.

Some people shred them but they can be worth their weight in gold. We recently had a borrower claim that his identity was stolen back in 2008 when the loan was originated. Our team was able to dig through the working file and find the copy driving license and passport from the application. Case closed

You will also find original title policies, 1003 application and a lot of borrower disclosures that will help you build a comprehensive picture of the borrower, his career and his ability to pay.

Good luck with notes 2-10!