NEW YORK--(BUSINESS WIRE)--On September 21, 2015, Kroll Bond Rating Agency (KBRA) issued a press release regarding a loan that was securitized in the Velocity Commercial Capital (VCC) 2015-1 transaction, which is rated by KBRA. For details, please click here. KBRA has now confirmed the repayment in full of the loan in question following continued communication with Velocity Commercial Capital, LLC (Velocity).
Since the publication of our press release, KBRA learned that contact was made with the borrower for the affected loan on behalf of Velocity and the borrower confirmed that it was occupying the mortgaged property as a primary residence in violation of the loan documents. The borrower subsequently refinanced the subject loan with a consumer loan and the proceeds from the refinancing were used to pay off the loan in the VCC 2015-1 securitization on October 27, 2015. Under the VCC 2015-1 transaction, the loan had not been declared to be in default and had not been transferred to special servicing at or prior the time of the repayment in full.
In addition to confirming the repayment of the affected loan, Velocity also indicated that it had revised its underwriting process and guidelines, as well as its verification procedures for loans secured by 1-4 unit investment properties. Such revisions to the origination process include new disclosures that are provided to the borrower at the time of the initial application; new controls for the underwriter to certify that all documentation for the related loan is consistent with a loan for a business purposes; the requirement that leases are in place for any refinance loans secured by 1-4 unit investment properties at the time of origination; pre-funding clearance requirements to confirm legal and underwriting compliance; immediate training of all credit personnel on the revised policies and procedures with respect to loans secured by 1-4 unit investment properties; and post-closing audits to verify that all documentation was properly executed and to provide random sampling of 10-15% of all loans secured by 1-4 unit investment properties. KBRA is in the process of reviewing the updated policies and procedures, which will be considered if KBRA is asked to provide feedback or ratings for future VCC securitizations.
About Kroll Bond Rating Agency
KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).