The success and integrity of any securitization transaction hinge on the rigor and thoroughness of its due diligence process. In today's dynamic and complex financial markets, insufficient or flawed due diligence can lead to significant financial losses, legal disputes, and a loss of investor confidence. While traditional due diligence focuses on financial and legal aspects, a modern approach must also encompass operational, technological, and environmental, social, and governance (ESG) factors. This comprehensive training course is designed to equip participants with the skills to navigate this complexity, ensuring every transaction is built on a foundation of transparency and sound risk management.

This intensive 10-day program offers a deep dive into the best practices for due diligence across the entire securitization lifecycle. We will explore the critical steps for evaluating asset pools, assessing the capabilities of servicers and originators, and verifying the accuracy of legal documentation. Through a combination of practical case studies, interactive workshops, and expert-led sessions, you will learn to identify key risk factors, implement a structured due diligence plan, and produce a high-quality due diligence report that meets the expectations of investors, regulators, and rating agencies. By the end of this course, you will be proficient in safeguarding transactions and enhancing their credibility in the capital markets.

Duration

10 days

Target Audience

• Securitization analysts and associates
• Risk and compliance professionals
• Credit analysts and portfolio managers
• Legal and transaction counsel
• Accountants and auditors
• Rating agency analysts
• Investment bankers and underwriters
• Senior management and decision-makers

Objectives

• Master the core principles of due diligence in structured finance.
• Develop a systematic approach for conducting due diligence on asset pools.
• Identify and mitigate legal, financial, and operational risks.
• Understand the role of third-party reviews and independent audits.
• Produce a comprehensive due diligence report for stakeholders.
• Evaluate the compliance and operational capabilities of servicers.
• Recognize red flags and potential areas of fraud.
• Navigate regulatory expectations for due diligence documentation.
• Learn best practices for post-closing and ongoing monitoring.

Course Modules

Module 1: Foundations of Securitization Due Diligence

• An overview of the role and importance of due diligence.
• The key parties involved and their responsibilities.
• The different types of due diligence (financial, legal, operational).
• Understanding the risk-reward relationship.
• Developing a scope and work plan for a due diligence review.

Module 2: Legal and Structural Due Diligence

• A deep dive into legal documentation and agreements.
• Verifying the validity and enforceability of underlying contracts.
• Reviewing the corporate structure of the Special Purpose Vehicle (SPV).
• Analyzing legal opinions and legal risk factors.
• Examining representations and warranties.

Module 3: Financial Due Diligence

• Verifying the accuracy of financial data and asset performance.
• Analyzing historical loss and prepayment data.
• Projecting future cash flows and performance.
• Assessing the originator's underwriting standards.
• Reconciling data from multiple sources.

Module 4: Data Integrity and Technology Due Diligence

• The importance of data quality in securitization.
• Verifying the data tape and its accuracy.
• Assessing the originator's data management systems.
• The role of technology in automating data verification.
• Identifying data privacy and security risks.

Module 5: Credit Due Diligence

• A detailed review of the asset pool's credit quality.
• Assessing borrower credit scores and default history.
• Understanding the collateral and its valuation.
• Analyzing concentration risks within the pool.
• Stress testing the asset pool under various economic scenarios.

Module 6: Operational Due Diligence on the Servicer

• The servicer's critical role in the transaction's performance.
• Evaluating the servicer's experience and track record.
• Assessing the servicer's operational processes and internal controls.
• Reviewing disaster recovery and business continuity plans.
• The importance of site visits and interviews.

Module 7: Due Diligence on the Originator

• The originator's influence on asset quality.
• Verifying the originator's underwriting and origination policies.
• Assessing the originator's financial health and stability.
• Reviewing past performance of the originator's loans.
• The importance of reputational due diligence.

Module 8: Third-Party Review and Audits

• Understanding the role of independent third-party reviewers.
• The scope and limitations of a third-party review.
• How to effectively manage the third-party review process.
• The use of independent auditors in securitization.
• Reviewing the findings and reports from third parties.

Module 9: Red Flags and Fraud Detection

• Common red flags in securitization transactions.
• The use of data analytics to identify suspicious patterns.
• The importance of whistle-blower policies and internal reporting.
• How to escalate and investigate potential issues.
• Case studies of fraudulent securitization deals.

Module 10: Due Diligence in Different Asset Classes

• The specific considerations for residential mortgages (RMBS).
• The unique challenges of commercial mortgages (CMBS).
• The due diligence process for auto loans and credit cards.
• Reviewing esoteric asset classes like solar loans or royalty streams.
• The role of due diligence in project finance securitization.

Module 11: International and Cross-Border Considerations

• Navigating different legal and regulatory jurisdictions.
• The impact of cross-border data transfer regulations.
• The challenge of verifying foreign assets and parties.
• The role of international treaties and agreements.
• Understanding currency risk and foreign exchange controls.

Module 12: ESG and Social Due Diligence

• The growing importance of ESG factors in securitization.
• How to incorporate ESG criteria into the due diligence process.
• Assessing the social impact of the underlying assets.
• Identifying environmental and governance risks.
• The impact of ESG on investor demand and pricing.

Module 13: Documentation and Reporting

• The importance of a well-organized due diligence file.
• Creating a comprehensive due diligence report for investors.
• The use of summary memorandums and presentation materials.
• The disclosure obligations under relevant securities laws.
• Best practices for record-keeping and data retention.

Module 14: Post-Closing and Ongoing Monitoring

• The responsibilities for monitoring performance after the deal closes.
• The role of the servicer and trustee in ongoing reporting.
• How to handle loan modifications and delinquencies.
• The process for handling asset defaults and foreclosures.
• The importance of continuous oversight and review.

Training Approach

This course will be delivered by our skilled trainers who have vast knowledge and experience as expert professionals in the fields. The course is taught in English and through a mix of theory, practical activities, group discussion and case studies. Course manuals and additional training materials will be provided to the participants upon completion of the training.

Tailor-Made Course

This course can also be tailor-made to meet organization requirement. For further inquiries, please contact us on: Email: info@skillsforafrica.org, training@skillsforafrica.org  Tel: +254 702 249 449

Training Venue

The training will be held at our Skills for Africa Training Institute Training Centre. We also offer training for a group at requested location all over the world. The course fee covers the course tuition, training materials, two break refreshments, and buffet lunch.

Visa application, travel expenses, airport transfers, dinners, accommodation, insurance, and other personal expenses are catered by the participant

Certification

Participants will be issued with Skills for Africa Training Institute certificate upon completion of this course.

Airport Pickup and Accommodation

Airport pickup and accommodation is arranged upon request. For booking contact our Training Coordinator through Email: info@skillsforafrica.org, training@skillsforafrica.org  Tel: +254 702 249 449

Terms of Payment: Unless otherwise agreed between the two parties’ payment of the course fee should be done 7 working days before commencement of the training.