RMBS and CMBS due diligence provider Clayton Holdings has been approved by DBRS as a third-party due diligence firm for RMBS deals.
The rating agency conducts a review process as part of its approval to assess the staffing, infrastructure and capabilities of due diligence companies before granting a firm its official third-party status.
The process also included an onsite operational risk review, which happened in Clayton’s Tampa facility.
“Clayton is pleased to be one of the first third-party reviewers to be vetted and approved by DBRS,” said Paul Bossidy, Clayton's chief executive officer. “When non-agency securitization returns on a broad scale, investors will expect significantly higher levels of transparency, and they will want to know that well-qualified due diligence firms followed wellestablished protocols in reviewing the quality of the assets backing the securities.”
Clayton's news follows New York-based RMG also being given approval by DBRS last week to offer third-party loan level reviews for RMBS. This would be for both pre- and post-securitization and for transactions that the agency rates.
RMG also meets the third-party review provider requirements of Moody’s Investors Service and Fitch Ratings, and is currently awaiting approval by Standard & Poor’s.
The company is also currently working with Kroll Bond Ratings to determine what the agency’s requirements are.
An earlier ASR article stated that the providers of due diligence services have more skin-in-the-game in the current market now that rating agencies have very stringent requirements to certify them.
“The certification process that we undergo now and the minimum standard of review didn’t really exist before,” said Charlie Cacici, a managing member at RMG. “This is a way of luring back investors to RMBS transactions.”