The Procurement Procedure: From NDA to MLPA
Unlike buying a house, acquiring institutional debt follows a highly structured corporate procurement process. Here is the exact sequence of events when acquiring a S&D mortgage from a bank.
1. The NDA
Institutions require a strict Non-Disclosure Agreement before releasing any borrower data or loan files.
2. Data Tape Review
Analyzing the Excel spreadsheet containing UPB, interest rates, payment history, and defect codes.
3. Indicative Bidding
Submitting an initial pricing offer based on the data tape, subject to final due diligence.
4. MLPA Execution
Signing the Mortgage Loan Purchase Agreement to legally transfer the asset.
The Data Tape
Once the NDA is signed, the bank sends the “Tape” — a massive Excel file listing all loans they are selling, with dozens of columns: UPB, Interest Rate, Origination Date, Borrower Credit Score, Property State, and crucially, the Defect Code explaining why the loan was rejected.
Indicative Bidding
You filter the tape to find loans matching your criteria (e.g., Document Flaws in Texas with <70% LTV). You submit an Indicative Bid — for example, “We bid 78% of UPB for Loan #1045.” If the bank accepts, you are granted exclusivity to perform deep due diligence.
The MLPA
If due diligence checks out, the transaction is finalized via the Mortgage Loan Purchase Agreement (MLPA). Upon execution and funding, the bank executes an Assignment of Mortgage and endorses the Promissory Note over to your entity. You are now the bank.