Securent, a newly formed provider of comprehensive risk management and insurance programs for mortgage and mortgage-backed securities (MBS) stakeholders, announced the launching of its insurance operations. A subsidiary of SitusAMC, Securent’s loan defect insurance protects primary and secondary mortgage participants against risk associated with defects introduced in the loan manufacturing process, including underwriting defects, compliance violations, fraud and misrepresentation, and appraisal errors, while increasing loan value, improving transaction speed, and enabling companies to efficiently scale to meet high borrower demand and market opportunities, the company announced in a release.
Securent’s suite of offerings include loan defect insurance and mortgage application fraud insurance with expansion to cover residential MBS (RMBS) loan defect insurance, and mortgage servicing rights (MSR) loan defect insurance in the near future, the company said. Also, Securent provides errors and omissions coverage and fraud coverage for appraisal errors.
The policies protect mortgage lenders, investors and RMBS issuers as well as warehouse lenders and other mortgage market participants from liabilities and losses associated with errors, omissions, or fraud introduced in the manufacturing process.
Securent’s said its insurance offering leverages SitusAMC’s experience in loan due diligence and technology to provide more timely and accurate reviews that support the insurance process. Clients may also utilize other loan diligence service providers, and in such cases, subject to Securent’s approval process, such loans may be eligible to be insured under the Securent program.
“As profit margins tighten, mortgage market participants are more aware than ever of potential losses associated with mortgage manufacturing defects,” SitusAMC’s Justin Vedder, president of Securent and mortgage market veteran, said in the release. “These fears can be alleviated with Securent. Our products mitigate transactional risk and enable lenders, investors and RMBS issuers to drive superior outcomes while still being able to rest secure in the value of their investments.”
Additionally, Securent utilizes a proprietary risk management model along with QC technology to assess, identify, and price the manufacturing risk on any mortgage asset. The combined technologies allow Securent to identify loans that require a full review while reducing the manual touchpoints on high quality/low risk loans. This enables Securent to enhance lender execution while protecting the insured from origination risk.
“We look at loans as if we were buying them, just like our clients. The only difference is we are insuring them,” Vedder said. “If we are going to take the origination risk, we want to be sure every loan is independently reviewed and accurately insured. This gives our clients the comfort that claims will be paid.”
Securent covers most material underwriting defects including guideline violations, income miscalculations and data integrity. It also covers compliance violations for points and fees, TRID errors, RESPA violations, fraud, and misrepresentation by employees, borrowers and sellers.