Data cleansing: adding value in detail
A global financial services organisation purchased the commercial portfolio of one of the UK's largest mortgage lenders with a view to securitising the assets. The portfolio comprised 558 loans with a book value of £622m and Crown was brought on board to service it and perform a complete data cleansing exercise to enable the portfolio's securitisation.
The average loan size was £1.1m but values ranged from £15,000 to £12.9m. 1,250 secured properties were involved, together with 2,660 tenants. We determined that the data held was very out-of-date and the poor drafting of mortgage deeds made data collection even trickier as some failed to compel borrowers to make these documents available to the lender. Data requirements frequently shifted as we uncovered more information about the loans and identified that some were connected to one another.
We created a dedicated team of around 20 employees to begin work on cleansing the portfolio's data. All borrowers were contacted and information/documents were accumulated to ensure there was a full set of tenancy schedules and insurance details as well as fully updated account data. A high level of detail was gathered with data collected even in instances where properties were multi-let residential units on assured short-hold tenancies. A single analyst was responsible for connected loans so they were able to gain complete understanding of each borrower.
Once the data cleaning exercise was complete Crown was in a position to easily undertake the commercial portfolio's servicing for our client. They speedily gained rating agency approval and completed the securitisation of their new commercial portfolio.
Backup servicing: stepping into the breach
Lehman Brothers completed a securitisation of Northern Rock commercial assets with Northern Rock acting as servicer and Crown as standby servicer on the pool. However, within six months Northern Rock resigned from their role and we were called in to take over the servicing of 639 loans with a book value of £933m – the first and only time a backup servicer has been called to action in the market.
The pool had an average loan size of £1.5m, with values ranging widely from £2,000 to £34.4m. We had a six month timetable to assume full responsibility for its servicing and so swiftly commenced the exercise of loading the portfolio's information onto our systems. The task was complicated by the several key factors:
- Data was held across several sources, e.g. databases, spread sheets and paper files
- Data relating to annual reviews and leases was often out of date
- There was little or no tenancy information held in Northern Rock's core systems
- There was only limited understanding of cross-collateralised property and exposure group information.
We obtained a full copy of Northern Rock's database and assigned dedicated members of our technology teams to analyse and configure bespoke frameworks so we could easily map the data between the two systems. We made several site visits to Northern Rock to understand the data held well in advance of any migration so the transfer process was smooth and trouble-free.
The data boarding exercise ensured that all the information was cleansed and brought together on a single system allowing accurate reporting and a clear view of the health of the portfolio. Business strategies for the management of the loans could then be developed and implemented from an informed position ensuring the optimum results for both clients and borrowers.
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