REO asset manager Green River Capital (GRC) is addressing the underlying risks that often surface in the REO-to-rental market with the launch of an internal surveillance division.

The launch comes at a time when the REO-to-rental business is rapidly expanding.

The new unit, which leverages the technology and due diligence offerings of GRC’s parent firm Clayton Holdings, is focused on giving investors, lenders and investment trusts the tools they need to analyze credit risk when vested in the REO-to-rental market.

"Rating agencies and institutional lenders have identified the property management function as an area of considerable credit risk to the financing and securitization of REO-to-rental portfolios," said Lorenz Schwarz, chief operating officer of Green River Capital.

"GRC’s surveillance division monitors risk components associated with ‘scattered-site’ residential property management and provides our clients independent, third-party assessments of portfolio and property management performance, comparing this to underwritten assumptions and actual market performance."

With REO-to-rental expanding, West Valley, Utah-based Green River Capital saw a need to get ahead of the credit risk component.

The company’s component servicing division, which was launched in 2012, is already providing property sourcing, acquisition and collateral underwriting services to the REO-to-rental space.