By Allan Maurer
ORLANDO, FL—Considering how much of the current economic mess was caused by bad mortgage loans, it’s not hard to understand why investors are putting money into Orlando-based Digital Risk. The company, which offers services to reduce the risk of mortgage loans, has raised $5 million of a $7.5 million equity round, according to a regulatory filing.

The company says its combination of advanced predictive modeling and risk analytic tools, hands-on loan reviews, and forensic underwriting helps its clients make informed loan decisions.

Digital Risk works with investment banks, hedge fund and private equity firms, fixed income security firms, serving organizations, bond guarantors, M&A for financial firms with mortgage positions, mortgage originators and rating agencies.

Many analysts say the failure of rating agencies to properly value mortgage loan packages led to much of the trouble the industry is experiencing now.

When the company was hiring in 2007, Digital Risk CEO Peter Kassabov said, “”We are investing heavily training employees in forensic underwriting, regulatory compliance and secondary markets requirements. Wall Street’s demand for our due diligence services is extremely high.”

“In the past,” said Kassabov, “the mortgage industry was origination-centric, that is, focused on originating and selling loans. Now, however, it’s a buyer’s market; investors are dictating operations,” he notes.

“We are training people to understand good investments and look at how a loan will perform. Mortgage lenders are reengineering expectations and we can help them determine what good mortgage backed securities looks like.”

Online: www.digitalrisk.com

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