Equifax is expanding the availability of technology it’s developed to aid mortgage investors analyzing whole loan portfolios before and after they’re purchased.
Credit Risk Insight Whole Loan is a Web-based technology for lenders and investors to better predict delinquency, default and prepayment trends, Equifax said. The Atlanta-based credit and analytics provider uses its vast database of consumer information to provide current borrower credit scores and other real-time data for nonsecuritized mortgages and home equity loans.
The technology could be especially appealing to investors conducting due diligence ahead of a potential loan purchase, when they must rely on consumer credit information from when the loan was originated, which could be outdated and not reflect the borrower’s current situation.
“For many investors and lenders, this has created a blind spot when assessing the financial profile of mortgage borrowers and making loan purchase and sale decisions," said Dennis Corkery, vice president, Equifax Capital Markets, in a press statement.
With timely data on borrowers’ current credit situation, investors can better more accurately assess the value of a loan portfolio when making pricing decisions and designing risk models.
Data and analytics firm 1010data uses Equifax consumer credit data to conduct predictive analysis of loan-level data. The New York-based company has expanded from providing technology and services to securitization investors by making its products available to the whole loan market.
“Whole loan trading has been going on for a long time; it’s not a new thing by any stretch,” Afshin Goodarzi, head of predictive analytics at 1010data, told ASR sister publication Mortgage Technology . “But the pickup and the interest in bringing in additional data assets to review and analyze, that is reasonably new; within the past three years or so when people started talking about it.”
One version of Equifax’s offering, called Pre-Bid, takes loan-level, nonpersonally identifiable information about a pool of loans, which can include loan origination date, ZIP code of the mortgaged property and loan amount, among others. Equifax performs a crosscheck of that data with its consumer credit information to statistically match the borrower to the loan and provides investors with 12 months of anonymous credit history on the borrowers.
After the loan and borrower are matched, Equifax can also run analytics to predict future performance based on current credit and bankruptcy scores, payment performance on previous mortgages, debt-to-income and past delinquency.
From there, investors apply their own models and business rules engines specific to their needs. The technology helps investors make a more informed bid on pools of loans because they have an accurate and timely picture of the borrowers’ current financial status.
For existing investors of loan portfolios, other versions of the Equifax service, called Post-Bid and Surveillance, provide investors with updated and current borrower credit information.