Would you work hard for months, run 19 1/2 miles of a 20 mile race, only to peel off before you hit the finish line?

Whole loan asset sale transactions are big, end-to-end events with multiple stakeholders working to complete the various pieces of a much bigger puzzle, often under strict timeframes to complete each of those numerous steps along the way. There are big pushes at countless stops throughout the process – the push to run title and complete diligence as quickly as possible, the push to close the deal itself by a specific deadline, and then the often months-long push to complete trailing document exceptions within the contractually defined timeframes for completion. Advancing from beginning to end efficiently and effectively in this environment often requires sets of experts with very specialized skill-sets doing what they do best – analyzing collateral and risk, negotiating contracts, and creating and recording documents that adhere to very specific legal and county requirements. It’s a small world with very high stakes, all driven by people with VERY unique skill-sets.

But sometimes the “grunt” work to take those last few steps to the end is the most important work of all.

A big part of the post-sale work on whole loan transactions is dedicated to clearing the collateral exceptions created by the sale of the loans. The seller or their representative, which could include collateral analysts and managers from their Capital Markets groups, collateral specialists from their mortgage servicer, or dedicated support teams from vendors in the industry, work through hundreds or even thousands of document exceptions required by the purchaser to complete their collateral files. There are hours of time spent preparing documents in proper format, researching and contacting third parties to execute items, and monitoring progress against contractual timeframes.  The end goal of all of this work is the same – getting every document necessary, in as complete and accurate a form as possible, into the hands of the purchaser in a timeframe that is acceptable to them, thus reducing repurchase risk for the seller.

So if the end goal is so important, why is it so easy to forget to take the last few steps to the finish line?

In my experience, one of the most neglected areas of the asset sale process is the piece that needs to happen once you have amassed all of your expertise and done almost all of your work – the end point reconciliations against your purchaser’s data. You can complete a thousand documents in 6 months, but if 500 of them are still showing up as outstanding on the purchase side, either because a package wasn’t processed properly, or the items that were sent create new exceptions, then you haven’t hit the finish line at all. Your repurchase risk remains the same, and you still have more work to do.

The reasons this happens are plentiful. It’s probably natural to hit pause on your momentum when you feel like the majority of YOUR work is done, and now the onus is on someone else to finish their own steps in the process. There are issues with the sheer volume and scope and variety of data – you could be reconciling against vendor reports, custodial reports, ad hoc reports produced via Excel or databases, and the data is always changing as more and more work gets done. This is also the part of the job that doesn’t easily allow for short cuts or bulk efficiencies – you need to go step-by-step through what your data is saying in comparison to what someone else’s data is saying, glean the many reasons for the differences, and identify the best way to communicate about those differences. That isn’t to say that expertise isn’t one of the backbones of this exercise too – it is. But the blood and sweat and muscle of all of it is the discipline and time and effort you put into making THE LAST STEPS OF THE PROCESS AS IMPORTANT AS THE BEGINNING STEPS.

Here within our Investor Services Team at Grid151, we make these last steps of the process one of our main priorities, because we have found time and again that they are the steps that are so easy to lose track of. We are constantly looking at ways we can analyze and interpret and collate disparate data sources. We focus on communicating throughout the process, both internally and externally, to ensure that we can translate our expertise into actionable feedback everywhere that action is needed. But more than anything else, we appreciate the amount of effort and discipline that goes into every single step of a Whole Loan Asset Sale transaction, from the beginning stages of ordering title to start going through the steps of a diligence review, to the very last discussions that take place when a seller and purchaser agree that a transaction is 100% complete and every potential repurchase demand is tied out. We know that the last steps to the finish line are often the hardest ones to take. But for that same reason, they are often the most important steps of all.