Hildene-CCC Depositor II, LLC ABS-15G

Exhibit 99.2 - Schedule 1

 

 

EXECUTIVE SUMMARY

THIRD PARTY DUE DILIGENCE REVIEW

 

Overview

 

Consolidated Analytics, Inc (“Consolidated Analytics”), a third-party due diligence provider, performed certain due diligence services (the “Review”) as described below on 125 mortgage loans acquired by Hildene-CCC Loan Acquisition II, LLC (the “Client”), through a bulk purchase. The review population included a total of 125 mortgage loans in connection with the securitization identified as HILD 2026-NQM1. The Review was conducted from March 2026 to September 2026 on mortgage loans originated between March 2026 and August 2026.

 

The Review was conducted consistent with the criteria for the nationally recognized statistical rating organizations, NRSRO(s), Fitch Ratings, Inc. (“Fitch”) and Kroll Bond Rating Agency, LLC. (“KBRA”).

 

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)Credit Documentation: A review of the documentation underlying the credit decision was performed to determine sufficiency for consideration in the Credit Review. The Credit Documentation review consisted of the following:

 

oLoan Application: Complete loan application is present in the loan file for all borrowers/guarantors;

 

oCredit Report: Credit Report in file for all borrowers and meets guideline seasoning requirements and contains clearance by The Office of Foreign Assets Control;

 

oIncome Documentation / Lease Agreements: Confirmation of the presence of income documentation in the loan file when required by lender or Client specified underwriting guidelines. For rental properties where existing leases are required to be verified, verify their presence and sufficiency for purpose based on underwriting guideline standards;

 

oAsset Documentation: Confirmation of presence of asset documentation requirements relative to loan type and guideline requirements for verification of closing funds and reserves;

 

oBorrower/Guarantor Identification: Verify that the file contains a copy of a government issued identification verification for each borrower (i.e. driver’s license, state identification, passport);

 

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oInsurance Certificate: Verify that the loan file contains a copy of the hazard insurance certificate for the subject property and that flood insurance is also documented when required;

 

oProperty Valuation: Confirm the presence of a complete appraisal report and supporting secondary independent estimate of value;

 

oCommercial Borrower Organizing Documentation: Confirm the presence of an Operating Agreement, Bylaws, related amendments and filings or other organizing and operating documentation relative to the commercial borrower entity;

 

oArticles of Incorporation/Certificate of Formation: Confirm that each loan file contains a copy of the Articles of Incorporation establishing registration within the state of operation;

 

oCertificate of Good Standing: Confirm that each borrowing entity is active in the state of registration by confirming the presence of a web print out or certification of good standing for the state is in the file;

 

oBorrower Authority / Consent of Members: Confirm that the loan file contains evidence that the individual executing the loan agreements has been given signing authority on behalf of the borrowing entity.

 

(b)Legal Documentation: A review of the documentation required to secure the lender’s interest in the loan and the borrower(s)’ obligations thereunder was conducted with the purpose of validating their presence in the mortgage loan file and sufficiency of execution:

 

oNote/Loan Agreement/Security Instrument/Extension: Verification of the presence of the note, loan agreement or security instrument as applicable and that the agreement is properly executed by all parties. Confirm that all applicable allonges or addenda to the note are evidenced in the loan file and duly executed by all responsible parties. If the subject loan has reached or is nearing maturity confirm that an extension agreement is present and duly executed by all required parties;

 

oMortgage/Deed of Trust/Assignment of Rents: Verify that a mortgage or deed of trust is in file and is duly executed and notarized and that it contains all applicable riders including an assignment of rents;

 

oPower of Attorney (“POA”): If closing docs are executed by a POA confirm that the POA complies with all applicable underwriting and legal requirements including those for timing, form, authority and execution;

 

oPersonal Guaranty: Verify that the requisite individual ownership percentage of a commercial entity borrower as stipulated within Client or lender underwriting guidelines has provided a personal guaranty for the loan;

 

oAffidavit of Commercial Purpose/Occupancy Certification: Verify that each file contains a borrower statement verifying that the loan is for commercial purpose and that the subject property will not be owner occupied;

 

oTitle Policy: Confirmation that the file contains evidence of title insurance and that the title is free from material defects that could affect lien position;

 

oDeed for Conveyance of Title: Confirm that the applicable Grant or Warranty Deed is evidenced in the loan file and properly conveys interest in the subject property;

 

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oPurchase Contract: If applicable, confirm the presence of a valid and executed Purchase and Sale Agreement along with any counter offers and modified terms of sale;

 

oSettlement Statement: As applicable based on loan type and origination date, confirm the presence of a final settlement statement in the mortgage loan file.

 

(c)Guidelines: The underwriting guidelines, as specified by Client, served as the criteria under which each loan qualification review took place. Qualification criteria included the following:

 

oBorrower/Guarantor Eligibility: Review each borrower to ensure that they meet eligibility requirements of underwriting guidelines;

 

oAssets: Validate that the mortgage loan file contains adequately qualified verification of assets to meet underwriting standards;

 

oDebt-Service Coverage Ratios “DSCR”: Calculate the debt-service coverage ratio to ensure it meets minimum guideline standards;

 

oCredit History: Review the borrower credit reports and any supplemental credit history documentation to verify whether the borrower met guideline requirements;

 

oCredit Scores: Review each borrower/guarantor credit report to validate that the credit score used in qualification is accurate and whether it meets minimum loan qualification and underwriting standards as specified in the underwriting guidelines;

 

oOccupancy: Confirm that the disclosed occupancy of the subject property is accurate and compliant with guideline requirements. Confirm that the borrower executed a commercial/business purpose affidavit and that no other documentation present in the loan suggests the subject property may be utilized for non-business purposes;

 

oLoan-to-Value Ratios: Recalculate the Loan-to-Value Ratio utilizing the Purchase Contract, Property Valuations and/or Loan Agreements to determine whether initial, as-is and as-repaired “LTV” and “CLTV” meet loan qualification and underwriting guideline standards based on the calculation methods set forth in underwriting guidelines;

 

oInsurance: Confirm the adequacy of hazard insurance coverage and that premiums are included in PITI calculations. If required based on flood zone, confirm the presence and adequacy of flood insurance coverage and that premiums are included in PITI calculations;

 

oCompensating Factors: Review and validate any compensating factors used in the qualification of the loan and in consideration of loan level underwriting guideline exceptions;

 

oLetters of Explanation: Confirm the presence of Letters of Explanation (“LOX”) where required per underwriting guidelines and that each such LOX adequately addresses the eligibility scenario under question;

 

oException Approvals: Confirm that any exceptions to underwriting guidelines and/or investor guideline overlays were fully documented, properly approved, and supported;

 

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oMisrepresentation / Fraud Review: Validate that an independent third-party fraud report was obtained for each guarantor when required by underwriting guidelines and that red flags on third party fraud reports have been reviewed.

 

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. In relation to investment property loans and cash out refinances of investment property loans, documentation provided in the loan file was reviewed to verify that cash out proceeds disbursed at the time of origination/consummation were utilized for business purposes. In the event use of proceeds cannot be validated, or are deemed to be utilized for consumer purposes, the loan was then subject to a “Compliance Review” of applicable regulatory requirements as noted below. When applicable, the Compliance Review included the following:

 

a.Test Loan Estimate(s) for accuracy and completeness as well as timing requirements as required by TRID Regulations

b.Test Closing Disclosure(s) for accuracy and completeness as well as timing requirements as required by TRID Regulations

c.Tolerance Testing

i.Compare Loan Estimate and Closing Disclosures

ii.Identify Tolerance Violations and applicable cost to cure

d.Comprehensive review of Closing Disclosure to determine transaction accuracy

e.Recalculation of APR and Finance Charge

f.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

g.Determine whether specified federal disclosures were provided timely based upon comparison of the application date to the dates on such disclosures

i.Service Provider List

ii.Home Ownership Counselling Disclosure

iii.ARM Disclosure

h.Compliance with QM as it relates to:

i.APR Test

ii.Points & Fees Test

iii.Prepayment Penalty Test

iv.Product Eligibility Testing

i.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

j.Confirm through NMLS the loan originator and originating firm’s license status was active and properly disclosed on appropriate loan documents

k.Check the Loan participants against the exclusionary list provided by Client or by the purchaser of the Loan(s)

l.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

m.When applicable, the Compliance Review included verification of eligibility for applicable regulatory exemption, which, for certain loans, constituted the full scope of the Compliance Review

Loans with application dates after January 10, 2014, are subject to the Qualified Mortgage (“QM”) rule and the Ability to Repay (“ATR”) rule under Regulation Z – the Truth in Lending Act. For these Loans, Consolidated

 

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Analytics will (a) verify the originator/aggregator provided QM designation, and (b) review the Loan for the eight

 

(8) Key Underwriting Factors below that are required pursuant to the ATR rule.

 

Consolidated Analytics reviewed applicable mortgage loans for compliance with the ATR and QM rule requirements based upon each mortgage loan’s originator designation of QM, Non-QM, or exempt from ATR.

 

oSections 1411 and 1412 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) amending TILA, as implemented by Regulation Z, 12 C.F.R. 1026.43, excluding investment properties, as set forth below:

 

▪The general Ability to Repay (ATR) underwriting standards (12 C.F.R. 1026.43(c)) as evaluated based on the applicable investor guidelines.

 

▪Refinancing of non-standard mortgages (12 C.F.R. 1026.43(d));

 

▪Qualified Mortgages (QM) (12 C.F.R. 1026.43(e) (including qualified mortgages as separately defined by the Department of Housing and Urban Development (24 C.F.R. 201 and 203 et seq.), and the Department of Veterans Affairs (38 C.F.R. Part 36 et seq.); and

 

▪Balloon-payment qualified mortgages made by certain creditors (12 C.F.R. 1026.43(f)).

 

oWith respect to QM (Safe Harbor and Higher-priced) designated mortgage loans, Consolidated Analytics reviewed the mortgage loan to determine whether, based on available information in the mortgage loan file: (i) the mortgage loan contains risky mortgage loan features and terms (e.g. an interest only feature or negative amortization), (ii) the “points and fees” exceed the applicable QM threshold, (iii) the monthly payment was calculated appropriately, (iv) the creditor considered and verified income or assets at or before consummation, and (v) the creditor appropriately considered debt obligations, alimony and child support. This portion of the Review includes a recalculation of all income and liabilities with attention to the appropriate documentation of each source.

 

oIf a mortgage loan was designated as QM, Consolidated Analytics reviewed the mortgage loan to determine whether, based on available information in the mortgage loan file, if the mortgage loan satisfied (i), (ii) and (iii) in the preceding paragraph.

 

oFor each QM designated mortgage loan that satisfied the applicable requirements enumerated above, Consolidated Analytics then determined whether the mortgage loan is a Safe Harbor QM or QM

 

Rebuttable Presumption by comparing the mortgage loan’s actual annual percentage rate, as recalculated, to the applicable average prime offer rate plus a certain applicable percentage. The Review also included determining, as applicable, whether a mortgage loan is a qualified mortgage as defined by the Department of Housing and Urban Development (24 C.F.R. 201 and 203 et seq.), and the Department of Veterans Affairs (38 C.F.R. Part 36 et seq.).

 

oFor each QM designated mortgage loan that does not satisfy the applicable requirements enumerated above, Consolidated Analytics then determines whether the mortgage loan complied with the ATR rule consideration and verification requirements, as defined within the applicable underwriting guidelines, and provided a due diligence designation of Non-QM indicating compliant, ATR risk indicating it may not be compliant, or ATR Fail, indicating it is non-compliant.

 

oConsolidated Analytics reviews the mortgage loan to determine whether, based on available information in the mortgage loan file, the creditor considered, as applicable, the following eight underwriting factors, and verified such information using reasonably reliable third-party records, at or before consummation:

 

▪Income / Assets - Recalculate borrower(s)’s monthly gross income, and validate funds required to close and required reserves, to Confirm that the borrower has current or reasonably expected income or assets (other than the value of the property that secures the Loan) that the borrower will rely on to repay the Loan.

 

i.     Review Loan documentation for required level of income and asset verifications.

 

▪Employment - Review file documentation for required level of employment

 

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▪Monthly Mortgage Payment: Confirm that the correct program, qualifying rate, and terms were used to calculate projected monthly mortgage payment.

 

▪Simultaneous Loans - Ensure that all concurrent Loans were included in the debt-to-income ratio (“DTI”) calculation, to properly assess the ability to repay.

 

▪Mortgage-Related Obligations - Validate that the subject Loan monthly payment calculation includes principle, interest, taxes, and insurance (“PITI”), as well as other costs related to the property such as homeowners’ association (“HOA”) fees, private mortgage insurance (“PMI”), ground rental fees, etc.

 

▪Debts / Obligations - Validate monthly recurring non-mortgage-related liabilities

 

▪DTI / Residual Income - Validate debt-to-income ratio (DTI), or “residual income,” based upon all mortgage and non-mortgage obligations, calculated as a ratio of gross monthly income, based on documentation provided in the file.

 

▪Credit History - Review credit report for credit history and required credit depth, including any / all inquiries, and determine a representative credit score from the credit report

 

General QM for any loans originated under the GQM Rule with application dates after 10/1/2022;

 

oPricing Thresholds:

 

▪Pricing for First Lien Loans:

 

o2.25% for a first lien covered transaction with a loan amount greater than or equal to $110,260 (indexed for inflation);

o3.5% for a first lien covered transaction with a loan amount greater than or equal to $66,156 (indexed for inflation) but less than $110,260 (indexed for inflation); and

o6.5% for a first lien covered transaction with a loan amount less than $66,156 (indexed for inflation).

 

▪Pricing for Manufactured Homes:

o2.25% for a first lien covered transaction secured by a manufactured home1 with a loan amount equal to or greater than $110,260 (indexed for inflation); and

o6.5% for a covered transaction secured by a manufactured home with a loan amount less than $110,260 (indexed for inflation).

 

oConsider Income and Assets:

▪Consumer’s current or reasonably expected income or assets (other than the value of the dwelling that secures the loan;

▪The consumer’s debt obligations, alimony, child support; and

▪The monthly DTI or residual income.

 

oVerification of Income and Assets:

 

▪Verification in compliance with one of the “safe harbor” guidelines will meet the QM verification requirement. A creditor is allowed to “mix and match” provisions of the different guidelines rather than only apply one guideline per loan.

▪The specific guidelines that the CFPB has designated for the safe harbor are: The GQM Rule provides that if the creditor verifies the consumer’s income or assets, debt obligations, alimony, child support, and monthly DTI or residual income by meeting the standards of certain specified third-party underwriting manuals, then a creditor is presumed to have complied with the verification requirement. These specified manuals are:

 

i.Chapters B3-3 through B3-6 of the Fannie Mae Single Family Selling Guide, published June 3, 2020;

  

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ii.Sections 5102 through 5500 of the Freddie Mac Single-Family Seller/Servicer Guide, published June 10, 2020;

iii.Sections II.A.1 and II.A.4-5 of the Federal Housing Administration’s Single Family Housing Policy Handbook, issued October 24, 2019;

iv.Chapter 4 of the U.S. Department of Veterans Affairs’ Lenders Handbook, revised February 22, 2019;

v.Chapter 4 of the U.S. Department of Agriculture’s Field Office Handbook for the Direct Single Family Housing Program, revised March 15, 2019; and

vi.Chapters 9 through 11 of the U.S. Department of Agriculture’s Handbook for the Single Family Guaranteed Loan Program, revised March 19, 2020.

  

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 receipt of 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:

 

a.Review original appraisal, determination 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.

b.Review appraisal, determination that property is completely constructed and appraisal is on an “as is basis,” or property is identified as not completely constructed by originating appraiser.

c.Review and determine if the appraisal report 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.

d.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.

e.Review adjustments (line item, net and gross adjustments) to ensure they are reasonable.

f.Ensure that the appraisal conforms to the guidelines provided from the Client.

g.Review appraisal to ensure all required documents were included.

h.Review location map provided within the appraisal for external obsolescence.

i.Ensure highest and best use and property zoning complies with guidelines.

j.Confirm there are no marketability issues that affect the subject property.

k.Ensure subject property does not suffer any functional obsolescence.

l.Where applicable, determine if the file did not contain the appraisal or other valuation method and a review could not be performed.

m.Additional valuation products were not required when the CU score provided was 2.5 or below or the appraisal was eligible for FHLMC Collateral Rep and Warrant Relief. In the event the CU score was greater than 2.5, or the appraisal was Not Eligible for FHLMC Collateral R&W Relief, an additional valuation product was obtained to confirm value was supported within 10% tolerance. Based on guidance from the seller, secondary valuation products may have been provided on loans that had an acceptable CU score or were Eligible for FHLMC R&W Relief.

 

Consolidated Analytics applied a cascade methodology to determine if the original appraised value was reasonably supported when compared to an independent third-party valuation product.

 

For loans reviewed in a post-close valuation review scenario (125 loans in total):

 

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Summary of Loan Reviewed Product Types:

 

Product Type Product Count
Desk Review 115
Secondary Appraisal 0
AVM 1
Collateral Underwriter (CU Score) 5
2000 One-Unit Appraisal Field Review 3
BPO 1

 

Consolidated Analytics either ordered the products on behalf of the Client or had independent access to the valuation products ordered by the Client.

 

If a Secondary Valuation product fell outside of a -10% tolerance, had an AVM FSD score that exceeded allowable thresholds, or was inconclusive, then an additional valuation product was obtained. There were zero (0) occurrences of this.

 

There were zero (0) PIW loans.

 

Product totals may not sum due to multiple products for each loan

 

TAPE INTEGRITY REVIEW RESULTS SUMMARY

 

Of the one-hundred twenty-five (125) mortgage loans reviewed, forty-seven (47) unique mortgage loans (37.60% by loan count) had a total of fifty-five (55) discrepancies across five (5) 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 Value 27 49.09%
Origination Date 21 38.18%
DSCR 5 9.09%
Qualifying FICO 1 1.82%
Property Type 1 1.82%
Grand Total 55 100.00%

 

Summary of Results

 

OVERALL RESULTS SUMMARY

 

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Final Loan Grades

Overall Loan Results: (DBRS, Fitch, Kroll, Moody’s, and S&P)
      Percent of
Event Grade Loan Count Original Principal Balance Review
      Population
Event Grade A 118 $63,132,222.00 94.40%
Event Grade B 7 $4,179,500.00 5.60%
Event Grade C 0 $0.00 0%
Event Grade D 0 $0.00 0%
Total Review Population 125 $67,311,722.00 100.00%

 

Compliance Results: (DBRS, Fitch, Kroll, Moodys, and S&P) 32 loans were subject to Regulatory Compliance testing. The remaining 93 business-purpose loans were appropriately designated Compliance N/A
Event Grade Loan Count Percent of Review Population
Event Grade A 32 100.00%
Event Grade B 0 0%
Event Grade C 0 0%
Event Grade D 0 0%
Total Review Population 32 100.00%

 

Valuation Results: (DBRS, Fitch, Kroll, Moody’s and S&P)
Event Grade Loan Count Percent of Review Population
Event Grade A 121 96.80%
Event Grade B 4 3.20%
Event Grade C 0 0%
Event Grade D 0 0%
Total Review Population 125 100.00%

 

 

 

Credit Results: (DBRS, Fitch, Kroll, Moodys, and S&P)
Event Grade Loan Count Percent of Review Population
Event Grade A 122 97.60%

 

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Event Grade B 3 2.40%
Event Grade C 0 0%
Event Grade D 0 0%
Total Review Population 125 100.00%

  

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 more than one exception. In such cases, the exception resulting in the lowest grade would drive the loan grade for that component of the review. The overall loan grade is the lowest grade for any one 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 99
Title Insurance Missing or Defective 3
Security Instrument Missing or Defective 2
Deed Missing or Defective 2
Purchase Contract is Incomplete 1
Missing VOM or VOR 1
HO6 Master Insurance Policy is Missing 1
B1 Tax Preparer Credential Verification Does Not Meet Guidelines 1
Personal Guaranty Agreement Incomplete 1
Borrower 1 3rd Party VOE Prior to Close Missing 1
Title Insurance Coverage - Inadequate Coverage 1
Borrower 1 Business Bank Statements Missing 1
Missing verification of taxes, insurance, and/or HOA fees for non-subject property 1
Borrower 1 Credit Report is Missing 1
Audited DTI Exceeds Guideline DTI 1
Borrower 1 Personal Bank Statements Missing 1
Property Title Issue 1
Asset Qualification Does Not Meet Guideline Requirements 1
Audited Reserves are less than Guideline Required Reserves (Dollar Amount) 1
Verification of Borrower Liabilities Missing or Incomplete 1
Audited Reserves are less than Guideline Required Reserves (Number of Months) 1
Hazard Insurance Missing or Defective 1
Asset Documentation Missing or Defective 1
Excessive LTV Ratio 1

 

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    Total Credit Grade (A) Exceptions: 126
B Credit Event – Requirement Not Met 1
Income and Employment Do Not Meet Guidelines 1
Excessive LTV Ratio 1
Total Credit Grade (B) Exceptions: 3
Compliance A Missing Required Affiliated Business Disclosure 20
No Compliance Findings 12
Charges That Cannot Increase Test 7
Initial Loan Estimate Delivery Date Test (from application) 4
Charges That In Total Cannot Increase More Than 10% Test 4
Initial Loan Estimate Delivery Date Test (prior to consummation) 2
Initial Closing Disclosure Delivery Date Test 2
Higher-Priced Mortgage Loan Test 1
Revised Loan Estimate Delivery Date Test (prior to consummation) 1
eSigned Documents Consent is Missing 1
Total Compliance Grade (A) Exceptions: 54
Property A No Property Findings 30
Third Party Valuation Product Not Provided within 10% Tolerance 1
Hazard Insurance Missing or Defective 1
Total Property Grade (A) Exceptions: 32
B Ineligible Property 2
Property Listed for Sale on Refinance Transaction 1
Leasehold Requirements Not Met or Not Provided 1
Total Property Grade (B) Exceptions: 4

 

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. 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. Employment, income, assets and occupancy are supported and justifiable. The borrower’s willingness and ability to repay the loan is documented and reasonable.

 

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Credit Event Grades
C The loan does not substantially meet the published guidelines. There are not sufficient compensating factors that justify exceeding the published guidelines. 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 complies with all applicable laws and regulations. The legal documents accurately reflect the agreed upon loan terms and are executed by all applicable parties.
B Nonmaterial exceptions identified but do not impact the enforceability of the mortgage loan or statute of limitations has expired on the loan. Remedy to cure or reasonably good faith effort to re-disclose was made to conform to applicable laws and regulations. All cures are fully documented by copies of the originator refund letter to the borrower, referencing the violation, canceled check, and proof of delivery.
C The loan violates one material law or regulation. A benefit to the borrower cannot be determined. Required material disclosures are absent from the loan file, or the legal documents do not accurately reflect the loan terms agreed upon. 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 Secondary value is supported within 10% of the original appraisal value. AVM used as a secondary valuation product has a value within 10% of the original appraised value and an FSD score less than or equal to .15. The appraisal was performed on an "as-is" basis and the property is complete and habitable at origination. The appraiser was appropriately licensed, and the appraisal form is compliant with Uniform Standards of Professional Appraisal Practices (USPAP), Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) and satisfies applicable legal and regulatory requirements.
B Additional secondary valuation products were obtained to support the original appraised value within 10%. 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 cannot be 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 the appraisal was not performed using USPAP and FIRREA compliant appraisal forms.
D The appraisal is missing from the loan file or there was not sufficient valuation documentation to perform a review. AVM was used as a secondary value with a FSD > 0.15, or an AVM performed by a non-Fitch-reviewed vendor.

 

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