Investment management firm Angel Oak Capital Advisors has selected Clayton Holdings to be the representation and warranty reviewer for a $150.4 million private-label securitization of nonprime whole loans.
Clayton is a provider of loan due diligence, surveillance, real estate owned (REO) property management and consulting services to the mortgage industry.
The transaction, which closed in January, is comprised of 555 nonprime whole loans originated by two of Angel Oak Capital’s affiliate companies, Angel Oak Mortgage Solutions and Angel Oak Home Loans.
In this role, Clayton will provide an independent review of certain loans based on triggers defined within the transaction documents. In the event that a loan becomes seriously delinquent or is liquidated with a realized loss, Clayton will complete a set of tests designed to determine whether the loan complied with the representations and warranties made about the loans to the trust and whether any observed test failure represents a material breach, the company says in a release.
Following Clayton’s reporting of a material breach, the trustee could then request repurchase or other remedy from the representation provider.