Case Study

RMBS Recovery Advisory and Analytics

Oakleaf was retained to prototype, design, and implement a loss mitigation process for a large financial institution’s holdings of defaulted Residential Mortgage-Backed Security (RMBS) Private Label Security (PLS) investments. Additionally, the scope included identifying breaches of representations and warranties and establishing the basis for, and an estimate of, the resulting dollar amounts of damages due to fraud and non-compliance that could be restituted to the original seller. This was an entirely novel effort that had not been performed previously in the RMBS securities industry. Our goal was to help the Client recover billions in lost investment dollars.

Over the past several years, Oakleaf has delivered services to this Client in the form of Oakleaf-managed teams and client-managed supplemental resources. We implemented a human capital strategy tailored to an assessment of skillset gaps and based on continuous conversations in collaboration with hiring managers to ensure that the right talent was available as the project moved through its lifecycle.

Approach

The project was highly specialized, requiring the engagement of numerous experts tasked with quickly gathering and analyzing financial data, providing a detailed analysis and understanding of complex mortgage loan level data, and recommending prototyped methods that combined loan level data with other available data sets to identify fraud, potential misrepresentations, and outright breach of contract situations. Oakleaf’s experts prototyped and tested reports and executed analytics routines to analyze and report on the litigation, and recommended methodologies to further sustain the analyses and reports of the data.

Oakleaf utilized powerful multi-level reporting functionality from the database we developed for the Client to identify the transactions with the highest potential value for successful repurchase claims based on fraud. We developed “Battle Plans” for each securitized loan and adjusted our strategies in response to, and in anticipation of, the complex and changing dynamics of the securities market and the changing legal and regulatory environment.

At the Client’s request, Oakleaf incorporated numerous specialized industry professionals who advised the Client’s stakeholders, including legal, policy, portfolio management, and economists. We also deployed statistical programmers and data analysts and managed the project. We adhered to the Client’s highly mature and well-controlled change management and SDLC standards.

Result

  • Oakleaf’s “Battle Plans” and analytics supported our client’s successful recovery of several billion dollars in settlements.
  • Oakleaf’s experts quickly identified innovative ways of leveraging available mortgage loan data to create a loan data repository and created a series of reports and new analytics methods. This data repository and associated analytics and reports became the Client’s first cloud-based data and computing platform.
  • The system was populated with static data, time-series data, valuation data, and public records data for more than 1,800,000 residential mortgage loans. Oakleaf ‘s experts designed and built over 20 analytic tools and reports to help the Client examine underwritten loans for potential fraud. Our workflows, streamlined QC processes, and standardized procedures ensured repeatable, consistent, timely results.

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