LoanPerformance Introduces "PreTell" Borrower-Level Prepayment Scoring
San Francisco, CA – October 25, 2004 – LoanPerformance, the leader in residential mortgage performance data and analytics, today announced the availability of the first five PreTell mortgage prepayment scoring models at the Mortgage Bankers Association’s 91st Annual Convention and Expo. The PreTell scoring platform was developed with the support of several leading mortgage originators, servicers, traders, investors and guarantors with the intent of creating an industry standard.
“PreTell represents a major step for the mortgage industry in addressing the financial impact of prepayment risk at the borrower level. Our clients will be able to design loan products and change their processes to make loans stickier and reduce borrower churning,” said Dan Feshbach, president and CEO, LoanPerformance. “With strong participation from leading customers in the development process we fully expect PreTell to be adopted as the industry-standard for loan-level prepayment scoring wherever mortgages are originated, sold, serviced, guaranteed, and securitized.”
PreTell provides a numeric score on an index of zero to 1,000 that predicts the likelihood of an individual loan prepaying within a six-month forecast window. Scoring initially is available for five mortgage loan types: conforming 30-year fixed-rate; jumbo 30-year fixed-rate; 30-year Alt-A fixed rate; subprime 2/28 Hybrid ARMs; and subprime 3/27 Hybrid ARMs. Additional models are currently in development for future release. By the first quarter of 2005, LoanPerformance expects to have models available that will cover at least 75% of all outstanding loan types.
In addition to predicting the overall likelihood for a loan to pay off, PreTell provides Refinance and Mover scores that measure the likelihood for the payoff being a refinance or a home sale, respectively. Because different factors drive the decision to move or refinance, lenders and servicers can more precisely target their retention marketing efforts and internal models can more accurately reflect borrower behavior.
PreTell scores differ from traditional prepayment models by the fact that they take into account a much wider, deeper and robust level of information about the household, the property and the loan performance history.
A dozen leading mortgage lenders, servicers, Wall Street dealers and guarantors supported the development and validation of the PreTell platform over the past 24 months through an industry roundtable assembled by LoanPerformance. Participants included: GreenPoint Mortgage; New Century Mortgage Corp.; Radian Guaranty, Inc.
“We expect PreTell to enhance our ability to price, sell and manage our mortgage production,” said Steve Abreu, executive vice president, production and secondary marketing at GreenPoint Mortgage. “The ability to forecast more precisely which loans will prepay will focus our customer retention and marketing efforts and should impact business performance.”
Rick Rhinehart, vice president, production performance at New Century Mortgage commented: "We believe that PreTell will help to differentiate New Century in a competitive mortgage market by enhancing investor perception of our loans in the secondary market and by ensuring that our products continue to meet borrower needs."
The PreTell score has been developed from the examination of nearly 1,000 factors that encompass demographic, property record, loan performance history, economic and market variables. Key data partners include The First American Real Estate Solutions and Acxiom Corporation. PreTell also draws on the LoanPerformance databanks, which include information on nearly 50 million active mortgage loans representing 85% of the market.
“The strong predictive performance of these initial models provides end users with a much more robust set of tools with which they can more effectively manage their interest rate and prepayment risk,” says Richard Harmon, Ph. D., senior vice president, scoring analytics and services at LoanPerformance.
Dr. Harmon also said that the PreTell scoring platform is designed to allow any institution to seamlessly integrate an enterprise-wide scoring automation platform into their existing infrastructure to facilitate real-time scoring for retention, risk management, securitization and portfolio evaluation purposes. Scores can be automatically updated on a daily or even real-time basis with live data links to our data providers and pushed to all critical points of usage within an organization. For the first time institutions will have a common method for evaluating and quantifying near term prepayment risk embedded in their servicing and investment portfolios.
PreTell will be commercially available beginning the first quarter of 2005. Companies interested in learning more about PreTell may contact Dave Hurt at 301.365.0407 or Richard Harmon at 734.975.6792.
About LoanPerformance
San Francisco, CA-based LoanPerformance is the leader in residential mortgage performance data and analytics, providing credit risk and decision-support tools to mortgage originators, servicers, securities issuers and investors. LoanPerformance’s industry-standard databases track the performance of over 46 million individual mortgage payments per month, representing 90% of outstanding prime mortgages, 75% of outstanding securitized nonprime mortgages, 80% of publicly traded non-agency mortgage securities, and 65 % of bank-owned home equity loans and lines of credit. LoanPerformance databases and analytical tools enable leading financial service institutions, Wall Street analyst and trading firms, and mortgage investors to make informed decisions by integrating robust data and analytics into their credit risk and securitization processes. For more information, visit www.loanperformance.com, or call 415.536.3500.
©2004, LoanPerformance. All Rights Reserved. PreTell is a trademark of LoanPerformance.
Media contact
John Lewis
Campbell Lewis Communications
202.261.6548
john@campbelllewis.com
