Mortgage Consumer Lending Services Overview

National Mortgage & Consumer Lending Services (MCL)

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The mortgage and consumer lending industry has experienced unprecedented changes. Financial services and housing are the nation’s most challenged economic sectors, and the industry is under the scrutiny of regulators, lenders, consumers and the public media. New reforms, regulations and agencies, such as the Consumer Financial Protection Bureau, have been established to help manage ongoing industry risk. This dynamic environment directly impacts a mortgage and consumer lending organization’s financial, operational and regulatory requirements, so organizations must manage related risks.

How KPMG Can Help
Our experience covers the operational and financial pillars of the Mortgage and Consumer Lending industry and is complemented by our FS Regulatory, FS Performance and Technology, and Forensics Assistance practices.

The Loan Life Cycle & The Four Pillars
Loan Origination & Secondary Marketing Operations & Finance
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Loan & Portfolio Servicing Operations
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Portfolio/Finance & Accounting
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Post Loan Sale
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Pre-qualification Processing Underwriting/Scorecards Appraisals Pre-closing Closing Funding Post-closing Pipeline Management/Best Execution Shipping & Delivery Quality Control Rate Locks & Hedging

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Loan File Set-Up/On-boarding Payment Processing Tax & Insurance Escrow Management Investor Reporting Custodial Accounting & Doc Management Delinquency Management Loss Mitigation Third Party Vendor Management Cross-sell Maximization Portfolio Retention Customer Service (Inbound and Outbound) Quality Control

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Modeling & Model Validation Capital Markets Securitization/Whole Loan Sales/Portfolio Loan, Portfolio, and ABS/MBS Valuations Liquidity Accounting Advisory ALLL ALM Capital Requirements Servicing Assets Risks related to Warehouses, SPVs, and Correspondences Hedging

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Regulation AB readiness and consulting CDO/CLO Note Valuation Reports CDO/CLO, REMICs, PFICs, CFCs, Partnerships, Grantor Trust, NIMS, Mortgage REITs Waterfall Payment Verification Market Discount and Original Issue Discount Tax Calculations Representation & Warranty Assessments Efficient Tax Structuring Tax Loan Modification Calculations REMIC Schedule Q/Excess Inclusion and PFIC / 5471 gathering and reporting Bad debt deduction support Integrated computation reporting platform

REGULATION/COMPLIANCE/AUDIT PERFORMANCE AND TECHNOLOGY FORENSICS ASSISTANCE

What We Do: Representative Service Offerings
Operations and Processes
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Servicing Operations
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Interest Rate Risk
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Default Management
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Operational assessments Process improvement services Business process flow mapping Underwriting Assistance (Automated Programs, QC, Scorecard Development, Compliance)

Loan Boarding Document Management Vendor Management Investor Reporting Quality Control

Asset-liability management (ALM) modeling Mortgage pipeline and hedging modeling Model validation for ALM & mortgage pipeline management Risk Management Consulting Liquidity Strategies

Gap analyses of meeting Treasury, GSE, and regulatory requirements Transactional testing for loss mit (incl. loan mods) and foreclosures; credit/compliance policies and procedural violations Fraud detection and prevention review analyses HAMP/HARP

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Analytics & Credit Risk Management
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Management and Regulatory Reporting Technology Services
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Behavioral and cash flow model validation and development Loan loss reserve forecasting process reviews and FAS 5 model validation Migration analyses for roll rate determination and collections operations efficiencies Credit data mining and modeling Evaluation of credit data mart design and utilization Credit analytics gap assessments, process reviews and roadmaps

Performance Management Dashboards Costing Analysis Business Intelligence Benchmarking/Gap Analysis
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Risk, compliance and financial package implementation Contact center technologies and process redesign Testing (unit, system and UAT, stress) Implementation planning and rollout, including training

Post Loan Sale
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Payment Verification Regulation AB readiness and consulting Securitization Vehicle Tax Compliance and Reporting Market Discount and Original Issue Discount Tax Calculations Significant Loan Modification Calculations and Model/System Solutions (Tax) Representation and Warranty Exposures

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Consumer Compliance
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Regulatory examination/litigation preparedness and/ or assistance Compliance management program and governance reviews Fair lending assessments and ongoing monitoring Third party vendor management reviews for consumer compliance

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Model Development
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Lease Accounting Model Effective Yield Model FDIC Loss Share Tracking and Reporting Model Tax Reporting Modules Servicing Rights Valuation Modeling Basel III Modeling

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Program/Project Management
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Valuation Services
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Large-scale program initiatives Small to mid scale project initiatives Program/project reporting facilitation Staff augmentation in the field by subject matter professionals

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Residential and commercial mortgage and asset-backed – Securities valuations Assistance with estimating loan losses associated with distressed mortgages Reasonableness reviews of management’s valuation model and assumptions Mergers and acquisition due diligence and advisory Consumer Whole Loan Pools Servicing Assets
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Accounting, Tax and Other Assurance Services
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CDO and CLO
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Structured products cash flow modeling RMBS, ABS, and CMBS Agreed-UponProcedures and Transaction Services Other-than-temporary impairment analysis, modeling and policy reviews ASC 860, ASC 810, ASC 310-20 review and project management Benchmark studies, market surveys, and trend analyses

PFIC and CFC Tax Reporting QEF and other investor tax compliance Effective Date Procedures, Payment Date Procedures, and Monthly Report Procedures Transaction Services

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The KPMG Advantage
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The National Mortgage and Consumer Lending Practice is:
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A group whose offerings span operational needs such as business process improvement and redesign, compliance assistance with new regulations, and financial analysis at the portfolio and loan level. A National Subject Matter Professional Group with approximately 200 fully dedicated professionals focused on the complex and ever-changing financial, operational, and regulatory needs of the mortgage and consumer lending industry. Our approach allows us to provide comprehensive services by drawing on the resources of our financial, accounting and tax services to the securitization industry. Our experienced Structured Finance professionals leverage their skills and sophisticated technology to help identify, analyze and resolve a range of financial, liquidity and regulatory challenges, including managing credit, interest rate, balance sheet and other risks, and preparing for strategic activities such as asset acquisition and liquidation, and mergers and acquisitions.

We provide broader advisory services, as well as external and internal audit subject matter assistance to the majority of Financial Institutions, Government Agencies, and Specialty Finance Companies. For example:
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Five of the top 10 global institutions Five of the top 8 US banks Four of the top 10 Fortune 1000 commercial banks Seventy percent of the top 15 Mortgage and Consumer Lending Companies

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In addition to mortgage lending companies and government sponsored entities, we serve the following consumer lending asset classes: Credit Cards/Unsecured Debt – Auto/Equipment Leasing – Student Lending – Non-bank Retail/Utilities
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MCL Contacts
Mark Twerdok U.S. Credit Risk Services Leader 412-232-1599 [email protected] Viktor Beletskiy Principal 703-286-8036 [email protected] Kimberly Davis-Riffe Partner 703-286-6850 [email protected] Pedro Goitia Partner 703-286-8140 [email protected] John Hermle Partner 703-286-8125 [email protected] Shelley Lee Hing Partner 703-286-8339 [email protected] David Pang Partner 703-286-8293 [email protected] Anthony Sepci Partner 213-955-8665 [email protected] Tina Stoliar Partner 949-885-5838 [email protected] Douglas Williams Partner 703-286-8380 [email protected]

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