SALUDA GRADE MORTGAGE FUNDING LLC ABS-15G
Exhibit 99.2
EXECUTIVE
SUMMARY
Third Party Due Diligence Review
Overview
Consolidated Analytics, Inc. (“Consolidated Analytics”) performed certain due diligence services (the “Review”) described below on HELOC mortgage loans acquired by the issuer Saluda Grade Opportunities Fund LLC through a bulk purchase. The review included a total of thirty (30) residential mortgage loans, in connection with the securitization identified as GRADE 2026-LOC7 (the “Securitization”). The Review was conducted from November 2025 through September 2026 on HELOC mortgage loans originated between October 2025 and August 2026.
Scope of Review
Credit Review
Consolidated Analytics performed a “Credit Review” to verify compliance with guidelines in effect at the time of loan origination, or other guidelines provided by Client prior to review, and ensure the characteristics used by the underwriter are supported by the file documentation; and determine whether any loans outside of those guidelines contain legitimate and approved exceptions with compensating factors.
The Credit Review attempted to confirm the following:
| a. | Eligibility Review |
| i. | Income / Assets |
| ● | Validate borrower(s) monthly gross income |
| ● | Validate funds required to close, required reserves |
| ● | Review file documentation for required level of income and asset verifications |
| ii. | Employment Status |
| ● | Review file documentation for required level of employment |
| iii. | Monthly Mortgage Payment |
| ● | Confirm program, qualifying rate, terms |
| iv. | Simultaneous Loans |
| ● | Validate all concurrent loans are included in the DTI to properly assess the ability to repay |
| v. | Mortgage Related Obligations : PITI, HOA, PMI, etc. |
| ● | Validate subject loan monthly payment (PITI) and associated obligations |
| vi. | Debts / Obligations |
| ● | Validate monthly recurring liabilities |
| vii. | DTI and/or Residual Income |
| ● | Validate debt-to-income ratio (DTI) based upon income and debt documentation provided in the file |
| viii. | Credit History |
| ● | Review credit report for credit history and required credit depth including any / all inquiries |
| ● | Determine representative credit score from credit report |
| b. | Validate LTV, CLTV, and HLTV |
| c. | Review borrower’s occupancy |
| d. | Validation through third party resource of the subject properties most recent twelve (12) month sales history |
| e. | Confirm sufficient evidence in loan file, by reviewing the underwriter’s decision to approve the loan based upon the borrows income, debt, and credit history, to support borrower’s willingness and ability to repay the debt |
| f. | Confirm that Final 1003 is sufficiently completed |
| g. | Provide Audit 1008 with accurate data based on file documentation |
| h. | Confirm Loan Approval conditions were met |
| i. | Review condominium questionnaire to verify all information is complete, prepared by an authorized representative, and address any red flags that may deem condominium project ineligible |
Compliance Review
Consolidated Analytics performed a “Compliance Review” to determine, as applicable, to the extent possible and subject to the caveats below, whether the loan complies with applicable regulatory requirements as noted below, each as amended, restated and/or replaced from time to time. The Compliance Review included the following:
| a. | Truth in Lending Act (TILA) |
| i. | Prohibited Acts and Practices: Review the HELOC disclosures to determine if any prohibited acts or practices are evidenced in the agreements. The review includes the following: |
| ○ | The required use of a publicly available index |
| ○ | No unilateral changes in terms, acceleration, or termination, unless expressly permitted No unpermitted collection of non-refundable fees |
| ii. | Early Disclosure: A Review of the HELOC Early Disclosures to ensure the proper format, timing, and content was provided in accordance with the TILA regulations. The review includes, but is not limited to: |
| ○ | All required early disclosures were provided within three days of the application date |
| ○ | The format and content of the early disclosures appear in the proper order and structure required under Reg Z |
| iii. | Initial Disclosure: A review of the HELOC Initial Disclosures to ensure the proper format and content was provided in accordance with the TILA regulations. The review includes, but is not limited to: |
| ○ | The format and content of the initial disclosures are provided as required under Reg Z |
| ○ | A statement of billing rights was provided at closing that aligns with the model form under appendix G of Reg Z |
| iv. | Identify Tolerance Violations and applicable cost to cure |
| b. | Recalculation of APR and Finance Charge |
| c. | Testing of: |
| i. | Federal High-Cost Mortgage provisions |
| ii. | Federal Higher Priced Mortgage Loans provisions |
| iii. | Local and/or State Anti-predatory and High-Cost provisions |
| iv. | HOEPA Points and Fees |
| v. | Points & Fees Test |
| vi. | Prepayment Penalty Test |
| vii. | Product Eligibility Testing |
| d. | Determine whether specified federal disclosures were provided timely based upon comparison of the application date to the dates on such disclosures |
| i. | HELOC Booklet |
| ii. | Counselling requirements of TILA, as implemented by Reg Z |
| iii. | ARM Disclosure |
| e. | Notice of Right to Cancel (Rescission) Review |
| i. | Confirm transaction date, expiration date, and disbursement date |
| ii. | Confirm document is properly executed by all required parties to the transaction |
| iii. | Confirm the correct Right of Rescission document was executed for the transaction type |
| f. | Loan Originator and Compensation Steering, as implemented by Regulation Z, 12 C.F.R 1026.36: Review relevant documentation to determine if compensation to a Loan Originator was based on a term of the transaction. Review relevant documentation to determine if there was dual compensation. Review the presence of the mortgage loan option disclosure to determine if the Steering Safe Harbor provisions were satisfied |
| g. | Confirm through NMLS the loan originator and originating firm’s license status was active and properly disclosed on appropriate loan documents |
| h. | Check the Loan participants against the exclusionary list provided by Client or by the purchaser of the Loan(s) |
| i. | Review closing documents to ensure that the Mortgage Loan information is complete, accurate, and consistent with other documents; Confirm collateral documents have been recorded or sent for recording |
The Compliance Review did not include any federal, state or local laws, constitutional provisions, regulations or ordinances that are not expressly enumerated above. Furthermore, the findings reached by Consolidated Analytics are dependent upon its receiving complete and accurate data regarding the loans from loan originators and other third parties upon which Consolidated Analytics is relying in reaching such findings.
Valuation Review
Consolidated Analytics performed a “Valuation Review,” which included the following:
| 1. | Review original valuation product provided, AVM, Exterior Only appraisal, or appraisal, to determine that property is in “average” condition or better, or property requires cosmetic improvements (as defined by the appraiser) that do not affect habitability. Should an area of concern be identified with the condition of the property, Consolidated Analytics will alert Client. |
| 2. | Review applicable original valuation product to determine that the property is completely constructed, and that valuation of the property was determined on an “as is basis,” or that the property was identified as not completely constructed by originating appraiser. |
| 3. | Review and determine if the applicable valuation product was performed on appropriate GSE forms and if the appraiser indicated in the body of the subject appraisal that the appraisal conforms to USPAP standards. |
| 4. | Review and determine the relevance of the comparable properties and ensure that a rational and reliable value was provided and supported as of the effective date of the origination appraisal product provided. |
| 5. | Review adjustments (line item, net and gross adjustments) to ensure they are reasonable. |
| 6. | Ensure that the origination appraisal product provided conforms to the guidelines provided from the Client. |
| 7. | Review origination appraisal product to ensure all required documents were included, as applicable. |
| 8. | Review location map provided within the appraisal product for external obsolescence. |
| 9. | Ensure highest and best use and zoning complies with guidelines. |
| 10. | Confirm there are no marketability issues that affect the subject property. |
| 11. | Ensure subject property does not suffer any functional obsolescence. |
| 12. | Where applicable, determine if the file did not contain the appraisal or other valuation method and a review could not be performed. |
For loans reviewed in a post-close valuation review scenario (30 loans in total):
An AVM, BPO, exterior only appraisal, or full appraisal was utilized as the original valuation product for all loans within the review population. An AVM was utilized for ten (10) loans, a BPO was utilized for one (1) loan, an exterior only appraisal was utilized for zero (0) loans, and a full appraisal was utilized for nineteen (19) loans.
In some instances, additional valuation products were provided. Sixteen (16) loans had AVMs, six (6) loans had Desk Reviews, one (1) loan had a BPO, and zero (0) loans had an exterior appraisal.
Product totals may not sum due to multiple products for each loan
TAPE INTEGRITY REVIEW RESULTS SUMMARY
Of the thirty (30) mortgage loans reviewed, thirty (30) unique mortgage loans (100.00 % by loan count) had a total of one hundred thirty-eight (138) tape discrepancies across seventeen (17) data fields. A blank or zero value on the data tape when an actual value was captured by Consolidated Analytics was not treated as a data variance.
| Fields Reviewed | Discrepancy Count | Percentage |
| Qualifying Total Reserves Number of Months | 30 | 21.74% |
| Qualifying All Borrower Residual Income | 29 | 21.01% |
| Initial Monthly P&I Or IO Payment | 28 | 20.29% |
| Qualifying Total Debt Income Ratio | 19 | 13.77% |
| Qualifying Housing Debt Income Ratio | 16 | 11.59% |
| Borrower 1 Origination Equifax | 2 | 1.45% |
| Qualifying CLTV | 2 | 1.45% |
| Borrower 1 Origination TransUnion | 2 | 1.45% |
| Borrower 1 Origination Experian | 2 | 1.45% |
| Borrower 2 Origination Equifax | 1 | 0.72% |
| Borrower 2 Origination Experian | 1 | 0.72% |
| Qualifying LTV | 1 | 0.72% |
| Borrower 2 Origination TransUnion | 1 | 0.72% |
| Underwriting Exception in File? | 1 | 0.72% |
| Application Date | 1 | 0.72% |
| Property Type | 1 | 0.72% |
| Note Date | 1 | 0.72% |
| Grand Total | 138 | 100.00% |
Summary of Results
OVERALL RESULTS SUMMARY
Final Loan Grades
| Overall Loan Results: | |||
| Event Grade | Loan Count | Original Principal Balance | Percent of Sample |
| Event Grade A | 24 | $7,230,191.00 | 80.00% |
| Event Grade B | 6 | $1,704,385.00 | 20.00% |
| Event Grade C | 0 | $0.00 | 0% |
| Event Grade D | 0 | $0.00 | 0% |
| Total Sample | 30 | $8,934,576.00 | 100.00% |
|
Credit Results: |
|||
| Event Grade | Loan Count | Percent of Sample | |
| Event Grade A | 25 | 83.33% | |
| Event Grade B | 5 | 16.67% | |
| Event Grade C | 0 | 0% | |
| Event Grade D | 0 | 0% | |
| Total Sample | 30 | 100.00% | |
|
Compliance Results: |
|||
| Event Grade | Loan Count | Percent of Sample | |
| Event Grade A | 30 | 100.00% | |
| Event Grade B | 0 | 0% | |
| Event Grade C | 0 | 0% | |
| Event Grade D | 0 | 0% | |
| Total Sample | 30 | 100.00% | |
|
Valuation Results: |
|||
| Event Grade | Loan Count | Percent of Sample | |
| Event Grade A | 29 | 96.67% | |
| Event Grade B | 1 | 3.33% | |
| Event Grade C | 0 | 0% | |
| Event Grade D | 0 | 0% | |
| Total Sample | 30 | 100.00% | |
Exception Category Summary
The table below summarizes the individual exceptions which carried an associated “A”, “B”, “C”, or “D” level exception grade. One loan may have carried more than one exception. In such cases, the exception with the lowest grade would drive the loan grade for that particular area of the review. The overall loan grade is the lowest grade for any one particular review scope (ex. a loan with a Compliance Grade of “B”, a Credit Grade of “A”, and a Property Grade of “A” would receive an overall Loan Grade of “B”).
| Exception Type | Exception Level Grade | Exception Category | Total |
| Credit | A | No Credit Findings | 12 |
| Borrower 1 Credit Report is Missing | 5 | ||
| Income and Employment Do Not Meet Guidelines | 4 | ||
| Approval/Underwriting Summary Partially Provided | 3 | ||
| Housing History Does Not Meet Guideline Requirements | 2 | ||
| Borrower 2 Credit Report is Missing | 2 | ||
| The Final 1003 is Missing | 1 | ||
| Payment shock exceeds guideline | 1 | ||
| Borrower 2 3rd Party VOE Prior to Close Missing | 1 | ||
| Borrower 1 CPA Letter Missing | 1 | ||
| The Deed of Trust is Incomplete | 1 | ||
| Income 1 Months Income Verified is Missing | 1 | ||
| Borrower 1 3rd Party VOE Prior to Close Missing | 1 | ||
| Audited FICO is less than Guideline FICO | 1 | ||
| Total Credit Grade (A) Exceptions: | 36 | ||
| B | Delinquent Credit History Does Not Meet Guideline Requirements | 2 | |
| Audited HCLTV Exceeds Guideline HCLTV | 1 | ||
| Audited Reserves are less than Guideline Required Reserves (Number of Months) | 1 | ||
| Audited Loan Amount is less than Guideline Minimum Loan Amount | 1 | ||
| Audited Reserves are less than Guideline Required Reserves (Dollar Amount) | 1 | ||
| Total Credit Grade (B) Exceptions: | 6 | ||
| Compliance | A | No Compliance Findings | 28 |
| Final HUD-1 Document is Missing | 1 | ||
| Right of Rescission is Missing | 1 | ||
| HELOC Authorization To Pay Missing | 1 | ||
| Missing Credit Score Disclosure (FACTA) | 1 | ||
| Total Compliance Grade (A) Exceptions: | 32 | ||
| Property | A | No Property Findings | 27 |
| Third Party Valuation Product Not Provided within 10% Tolerance | 2 | ||
| Total Property Grade (A) Exceptions: | 29 | ||
| B | Property has been listed for sale in the past 6 months | 1 | |
| Total Property Grade (B) Exceptions: | 1 |
Event Grade Definitions
| Final Loan Grade | |
| A | Loan meets Credit, Compliance, and Valuation Guidelines |
| B | The loan substantially meets published Client/Seller guidelines and/or eligibility in the validation of income, assets, or credit, is in material compliance with all applicable laws and regulations, and the value and valuation methodology is supported and substantially meets published guidelines. |
| C | The loan does not meet the published guidelines and/or violates one material law or regulation, and/or the value and valuation methodology is not supported or did not meet published guidelines. |
| D | Loan is missing documentation to perform a sufficient review. |
| Credit Event Grades | |
| A | The loan meets the published guidelines without any exceptions. The employment, income, assets and occupancy are supported and justifiable. The borrower’s willingness and ability to repay the loan is documented and reasonable. |
| B | The loan substantially meets the published guidelines but reasonable compensating factors were considered and documented for exceeding published guidelines. The employment, income, assets and occupancy are supported and justifiable. The borrower’s willingness and ability to repay the loan is documented and reasonable. |
| C | The loan does not substantially meet the published guidelines. There are not sufficient compensating factors that justify exceeding the published guidelines. The employment, income, assets or occupancy are not supported and justifiable. The borrower’s willingness and ability to repay the loan were not documented or are unreasonable. |
| D | There was not sufficient documentation to perform a review or the credit file was not furnished. |
| Compliance Event Grades | |
| A | The loan is in compliance with all applicable laws and regulations. The legal documents accurately reflect the agreed upon loan terms and are executed by all applicable parties. |
| B | The loan is in material compliance with all applicable laws and regulations. The legal documents accurately reflect the agreed upon loan terms and are executed by all applicable parties. Client review required. |
| C | The loan violates one material law or regulation. The material disclosures are absent or the legal documents do not accurately reflect the agreed upon loan terms or all required applicants did not execute the documents. |
| D | There was not sufficient documentation to perform a review or the required legal documents were not furnished. |
| Valuation Event Grades | |
| A | The value is supported within 10% of the original appraisal by the AVM or there are other supporting documents in the originators loan file package (CDA, Field Review or Second Appraisal). The appraisal was performed on an “as-is” basis and the property is complete and habitable at origination. The appraiser was appropriately licensed and used GSE approved forms. |
| B | The value is not supported within 10% of the original appraisal by the AVM and there are no other valuation support documents in the loan file provided by the Seller. The valuation methodology substantially meets the published guidelines but reasonable compensating factors were considered and documented for exceeding guidelines. The appraisal was performed on an “as-is” basis and the property is complete and habitable. The appraiser was appropriately licensed and used GSE approved forms. |
| C | The value is not supported within 10% of the original appraisal. The valuation methodology did not meet the published guidelines and there were not sufficient compensating factors for exceeding published guidelines. The property is in below “average” condition or the property is not complete or requires significant repairs. The appraisal was not performed on an “as is” basis. The appraiser was not appropriately licensed or did not use GSE approved forms. |
| D | The file was missing the appraisal or there was not sufficient valuation documentation to perform a review. |