A new due diligence firm created by a trio of former Clayton Holdings executives wants to shake up a static business model.

"There is an opportunity to evolve due diligence offerings in the marketplace," said New Diligence Advisors' Managing Director Tom Donatacci. "So we thought it was a market that was fertile for some innovation."

Many users of these services are using sources outside of their current due diligence product in order to get a full picture of what was going with loans they were acquiring and how to price them, how to service them and how to get them reperforming.

"And in that regard we felt like we were able to bring all of that together and bring a premium product to the marketplace," Donatacci said.

Tom Donatacci
Tom Donatacci is the managing director at New Diligence Advisors.

Initially, NDA is going to focus on providing due diligence services for acquirers and sellers of nonperforming loans, reperforming loans and non-qualified mortgage loans. It is in the process of obtaining ratings agency approvals so it can work with securitizations.

"Most of the largest buyers of diligence services use more than one firm, so even with some of those firms continuing to stay focused in this space, we think there is some opportunity to acquire some of the users of diligence services" as customers, Donatacci said.

Plans for NDA were in the works before Radian Group made its announcement last October on plans to restructure Clayton's business, he added. "Whenever one of the major players in the industry leaves a vacuum it is an opportunity, particularly if you've got a competitive product."

Besides being a former executive at Clayton, Mark Hughes, NDA's chief operating officer, was at LenderLive and CoreLogic. Earlier, he was president and chief operating officer of the Bohan Group.

Hughes is responsible for overseeing production, client satisfaction, technology and ratings agency relations. He reports to Joe Pensabene, Selene's chief executive officer, who will now be CEO and president of NDA, as well.

Donatacci has been with Selene Holdings, NDA's primary owner, for three years. Previously he was head of sales and marketing at Clayton. The other managing director, Ann Gibbons, was Clayton's senior managing director and before that chief operating officer of The Murrayhill Co.

Selene Holdings is owned by Oaktree Capital Management and Ranieri Partners Management and is also the parent of special servicer Selene Finance.

NDA will have offices in Horsham, Pa., and Jacksonville, Fla., where Selene also has offices.

The company will also provide diligence for mortgage servicing rights portfolio sales. With mortgage interest rates rising, servicing values are also projected to rise and that should bring sellers into the market.

A lot of current trades involve portfolios where the seller retains the subservicing rights and those deals also require diligence services.

"Anybody who is going to invest capital to buy that asset class, even if they are going to leave it subserviced with the seller, needs to do a certain amount of diligence in order to price it accordingly," Donatacci said.

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