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Case Study

Transitioning and managing problem debt

We worked with our client to execute a critical transfer of distressed assets within an aggressive schedule, positioning it to mitigate losses and gain control.

The Situation

In 2009, with the US housing market in turmoil and delinquency levels on the rise, a top-ten retail bank decided to transfer certain distressed assets to a new, specialized in-house loan servicing function. In order to stem losses and gain greater control, the client needed to transfer these portfolios as swiftly as possible. The Chief Risk Officer set a very direct mandate for the program team: given the forecast losses, the loan transfer was of critical importance to the bank and needed to be completed as quickly as possible.

The Satori Solution

Our first action was to develop business requirements and detailed project plans, which we consolidated into a master plan that was used to communicate with the executive group. Next, we conducted two mock transfers, which allowed us to identify and remedy issues ahead of the final go-live. This effort was complemented by the testing of a revised daily surveillance report consisting of over 250 separate data points, which became the new operational standard. During the conversion weekend, Satori consultants focused on maintaining the balance of the entire set of portfolios. After managing the transfer of assets, we monitored trailing payments through one cycle while transitioning daily responsibilities to the client team.

The Results

At the conclusion of the engagement, $6.4B of assets, balanced to within $800, had been successfully transferred. Furthermore, by developing robust reporting and deploying loss mitigation strategies, our client was positioned to more effectively service the transferred loans and stem the bank’s losses.

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