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Andrew Davidson unveils new home equity model

Andrew Davidson & Co. developed a new prepayment model for sub-prime loans to replace its existing model, built using loans originated by GMAC-RFC from January 2000 through December 2004. Details of the new model for 30-year and 15-year fixed-rate home equity loans are available in Quantitative Perspectives, the company's periodic research publication. "We have determined that there are common features to prepayments across product types. This model utilizes the same framework as our prime mortgage models, taking into account turnover, rate/term refinancing, cash-out refinancing and credit cure."

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