Hilltop has significantly expanded our team of financial services credit and securitization analysis consultants. As a result of our ongoing litigation support engagements, expanding securitization modeling efforts and our credit analysis engagements, Hilltop’s capabilities have increased significantly across all types of financial assets. Hilltop is different than our competition in one major respect – our financial modeling consultants work very closely with our growing number of CPAs with financial services experience. The benefit is that Hilltop can use the credit analyses to help our clients with the allowance for loan losses. Hilltop is also well aware of the bank examiner requirements for loan risk and loan loss accounting.
For our loan portfolio risk assessments, Hilltop assesses the loan portfolio by identifying the historical risk patterns, the emerging risk patterns for new loan types, financial and operational performance metrics for the loan origination and servicing areas (using our PerforMetrics tool), comparison of projected vs. actual loan performance (for securitized assets) and standard measures such as loss frequency and severity. The loan portfolio analytics can also measure the impact on credit performance trends given macro-economic events, lender policies, controls effectiveness, underwriting policies/processes, QC responsiveness, etc. Assets can include mortgages, credit cards, commercial or multifamily loans, as well as, the securities that are backed by such assets. Loan characteristics do drive asset performance. Our portfolio analytics have identified characteristics that impact performance including but not limited to the following: interest rates above market, jumbo loans, loan to value ratio, high debt to income ratios, economically distressed geographic areas, borrower FICO, adjustable rate structures, FHA/ VA loans, non-owner occupied loans, etc. Hilltop has modeled portfolio risk and has tested our clients’ models. Hilltop can test our client’s portfolio risk analytics to determine whether any significant risks are not being identified. We can also help enhance your calculations to ensure that portfolio credit risk is being properly monitored and that such high quality risk analyses are providing actionable data to mitigate such portfolio credit risks.
Hilltop has several senior team members including our CEO (who led KPMG’s National Structured Finance Practice) that have extensive securitization experience. Our experience includes reviewing transaction structures, performing diligence on the collateral to determine if such complies with the deal’s asset description, modeling deal cashflows, assessing disclosures in the offering document, helping with closing activities for several large clients, assessing risk and cashflow updates after the security is issued, calculating bond payments among the various tranches, assessing “trigger events” and their impact on cash distributions, etc. We have also modeled and assessed compliance for any “replacement/substitution” of assets, if applicable. Our modeling team can also provide cashflows for valuation of a particular tranche or investment made by one of the investors. Hilltop has also applied our portfolio risk analytics to the underlying collateral to help issuers with ongoing analyses and disclosures made to the investors.
