The assessment of mortgage credits is a delicate and complex activity resulting from several heterogeneous activities: in order to achieve an excellent result, the performance of these activities must be scrupulously planned.
The main steps of due diligence are:
- technical / estimate analysis: draft and collection of technical-appraisal reports, commercial assessment, drive-by activities to contextualise the local market and the conditions of the property;
- judicial analysis: verification of the legal activities already carried out, estimate of the times, costs and following actions as well as of the enforcement / insolvency proceedings;
- credit quantification: collection of the document data and verification of the calculations already made by the seller; recalculation of the credit with particular reference to the senior tranche (see art. 2855 of the Italian Civil Code) and to the reformulation of the interests pursuant to the provisions of the Italian Civil Code.
GMA specialises in due diligence in relation to non-performing mortgage credits. In 2012, we established a specialised internal team with a wide experience gained from hundreds of different cases thanks to portfolio assessment activities as well as to analysis of very complex single-name positions.
The performance of due diligence on a portfolio rich in positions and on a single name are two activities very different from each other, although they aim at the same objective. In the first case, statistical approaches prevail and a greater attention is paid because, in some cases, it is impossible to thoroughly follow the steps described in the previous paragraph due to time and cost-efficiency reasons; in the second case, the position is investigated more in detail. Upon the credit sale, even the maximum purchase price may correspond to the seller’s requests.
The final result is a prudent and comprehensive credit assessment to the greatest extent which considers all the variables involved and makes the customer aware of the actual potential of the asset.
Starting from an accurate checklist, the company has developed an in-house software (REV GMA) connected with the most advanced big data systems and artificial intelligence within the industry. The system is connected to the major public and private databases in the sector.
Therefore, a simple initial data entry activity provides a reference parameter for our already reliable due diligence, to which referential and statistical studies were added to support the data already collected.