California DFPI Per Diem Interest Audit
CrossCheck assisted a large mortgage lender in responding to allegations by the California Department of Financial Protection and Innovation (DPFI), formerly the Department of Business Oversight (DBO), that it had not properly computed per diem interest on California loan closings. The lender engaged CrossCheck to perform an independent compliance audit of a sample of loan files selected by the agency and recompute the per diem interest. Our findings and insights helped the lender favorably resolve allegations with the DBO, improve operational processes, and avoid significant fines.
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Commercial Loan Portfolio Annual Review
CrossCheck has performed commercial loan review services for a variety of banks and financial institutions. These engagements have included assessments of underwriting and credit administration standards and practices; effectiveness of risk identification activities, including the ratings attributed to individual loan relationships and the overall portfolio; and risk management protocols to identify, measure, monitor, and manage portfolio risk. The reviews provide independent evaluation of institutional process and verification of the level of credit risk within the commercial loan portfolio.
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Due Diligence – Commercial Loan Portfolio Review
CrossCheck was engaged to perform a due diligence review on an acquisition target’s commercial loan portfolio and other real estate owned to assess asset quality, collectability, and potential credit risk prior to purchase. CrossCheck’s review uncovered the lack of both adequate loan monitoring and basic loan administration procedures. This independent assessment allowed our client, the acquiring bank, to proceed with the transaction informed of the potential risks inherent in the portfolio.
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GSE Repurchase Demand Review and Rebuttal Support
CrossCheck has assisted a number of clients that received repurchase demands from Fannie Mae and/or Freddie Mac. CrossCheck performed forensic reviews to verify the allegations in the GSE repurchase demands, and where appropriate, prepared rebuttal letters and supporting evidentiary files. CrossCheck’s work helped clients challenge repurchase demands and successfully rebut thousands of claims.
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Loan and Credit Risk Process Review
A credit union experiencing rapid growth in its member business loan portfolio requested an independent review of its business lending portfolio and related loan policies and procedures to ensure adherence to safety and soundness expectations. While overall policies and procedures were satisfactory, CrossCheck recommended enhancements to loan review procedures and compliance with the Flood Disaster Protection Act and implementing regulations. Our review helped strengthen the institution’s business loan risk management process and related flood compliance procedures, reducing exposure to potential monetary penalties.
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Loan Exception Policy and Procedure Review
CrossCheck conducted an independent review of a bank’s updated loan exception tracking policy and procedures following criticism from its prudential regulator. Applicable regulatory requirements, prudent business practices, and CrossCheck’s years of experience were the basis for recommendations to further enhance controls and processes and meet regulatory and business requirements.
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Mortgage Fraud and Repurchase Review
The mortgage subsidiary of one of the nation’s largest banks engaged CrossCheck to perform a forensic review of residential mortgage loans acquired from various mortgage lenders and correspondent banks. Our mortgage fraud specialists reviewed the loans to determine whether material misrepresentation existed, which would result in a request to repurchase the loan. CrossCheck determined on which loans repurchase should be requested and prepared the supporting evidentiary files, resulting in millions of dollars in mortgage putbacks.
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Mortgage Loan Modification File Review & Remediation
After receiving a CFPB memorandum of understanding (MOU), one of the nation’s largest independent mortgage originators and servicers engaged CrossCheck, upon CFPB non-objection, to conduct a look-back review of several thousand loan modifications made over a two-year period. CrossCheck reviewed each modification to determine if fees assessed and cash contributions granted as part of the approved loan workout were calculated and disclosed properly to the borrower. Detailed reporting, including identifying refunds to affected borrowers, was provided to the CFPB. As a result, the client was able to complete required remediation and satisfy CFPB expectations in a timely manner.
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Mortgage Portfolio Review and Acquisition Due Diligence
A national mortgage lender engaged CrossCheck to perform a comprehensive portfolio purchase loan review as part of its acquisition of several mortgage companies. Examining loan samples from each prospective acquiree, CrossCheck evaluated loan quality, adherence to underwriting standards, and regulatory compliance. By identifying potential risks and confirming the portfolios met the lender’s quality expectations, we provided actionable insights to support informed acquisition decisions.
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Mortgage Servicing Compliance Reviews
CrossCheck has conducted numerous default servicing and foreclosure look-back loan file reviews for mortgage servicers in connection with regulatory requirements tied to the 2011 Consent Orders issued to major loan servicers. Each review included CFPB mortgage servicing requirements related to early intervention with delinquent borrowers, continuity of contact, loss mitigation procedures, and foreclosure processing. These loan reviews have kept clients in compliance with regulatory requirements and allowed them to improve their operational controls.
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Post-Closing Quality Control and Denied Applications Review
To assure the quality and integrity of its consolidated student loan originations, a bank engaged CrossCheck to perform post-closing quality control reviews on a sample of its monthly originations and denied applications. CrossCheck reviewed the underwriting and compliance performance of the loans and provided monthly reporting with findings and trend analysis. As a result, the bank gained greater confidence that its student loans and the securities they backed conformed to the bank’s quality standards and market expectations.
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Post-Purchase Loan Portfolio Review
Following a client’s acquisition of the assets of a failed bank, CrossCheck performed a credit and loan documentation review of the acquired portfolio and interviewed loan department personnel from the failed bank. The review uncovered issues and documentation errors that posed credit and financial risk to our client. Our review provided the information needed to support ongoing administration of the acquired loans thereby mitigating future loss exposure.
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Regulatory Compliance Training
Banks, fintechs, mortgage lenders, and credit unions have engaged CrossCheck to design and deliver regulatory compliance training programs for business lines, senior management, and board committees. Training has addressed BSA/AML, HMDA, CRA, fair lending, ECOA, loan servicing, TRID, UDAAP, FCRA, and other high-risk regulatory areas with content tailored to specific roles, risks, and operational realities. These engagements have helped clients strengthen internal training curriculums, procedural documentation, and regulatory preparedness.
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Residential Mortgage Due Diligence
CrossCheck was engaged by a regional bank to perform due diligence reviews of mortgage loan samples from three proposed separate bulk whole loan purchases. The portfolios consisted primarily of conventional and jumbo mortgage loans, and the bank requested an assessment of compliance with federal and state regulatory requirements. CrossCheck examined more than 200 compliance data points, including requirements under Regulation Z, Regulation X, TRID, flood insurance, private mortgage insurance, and Higher-Priced Mortgage Loan requirements, as well as applicable state disclosures across 34 states. At the conclusion of the review, CrossCheck delivered a summary of findings identifying high-, medium- and low-risk issues for each loan so the bank could assess acceptable risk levels for each of the bulk whole loans considered for purchase.
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Second-Lien Portfolio Repurchase and Servicing Review
A large regional bank that purchased a portfolio of second-lien loans on a servicing-retained basis was concerned that the original underwriting was not as represented and was dissatisfied with the servicing. CrossCheck reviewed the loan origination and servicing contracts to assess each party’s rights, including repurchase and servicing transfer, and performed a thorough review of the origination and servicing files. We provided opinions regarding servicing in accordance with the contract and industry-standard practices. We also evaluated underwriting exceptions, compliance issues, and misrepresentation. As a result, the client was able to negotiate a favorable settlement and transfer the portfolio to another servicer.
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Securitization Due Diligence Portfolio Review
In anticipation of securitization, multiple clients have engaged CrossCheck to perform independent due diligence reviews of non-QM portfolios. The reviews are designed to meet rating agency requirements and include analysis of credit, compliance, collateral, and data accuracy.
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UDAAP Compliance Review of Debt Protection Products
Due to regulatory concerns related to UDAAP compliance, a regional bank engaged CrossCheck to assist with a multi-phase review of its debt protection product administration, including a look-back review of thousands of loans originated with debt protection over several years. We provided project management and a dedicated team of 12 consultants to develop the review methodology, train reviewers, oversee quality assurance, and deliver management reporting throughout the engagement. The review included detailed analysis of customer activity and loan servicing over the life of each loan to identify potential customer harm and inform remediation decisions. Based on that review, CrossCheck provided management with the information needed to evaluate its practices and support corrective action to mitigate future consumer risk.
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