Collateral Analytics has developed an important enhancement to its Credit Risk Model (CRM) to now provide similar analysis for seasoned loans.
The CA CRM for seasoned loans provides information about the credit risk associated with a mortgage which has been originated at some point in the past. This product combines CA’s industry leading AVM with its proprietary home price forecasts and metro level default and prepayment models to predict the expected profitability of a residential mortgage.
“Our CRM product is designed for lenders who seek additional information about the credit risk in their portfolio and the capital required to meet stress scenarios,” says Michael Sklarz, President and CEO of Collateral Analytics, a leading provider of comprehensive automated valuation solutions and real estate analytic products for large lenders and the financial services industry. “It can be also utilized by investors to assess the potential value and risk associated with individual loans or mortgage portfolios or RMBS pools.”
A Collateral Analytics case study of still performing loans conducted with the CRM is available here. The study suggests that lenders would be justified in providing much lower capital amounts than would typically be assigned for UPBs unadjusted for predicted risk. It also concludes that potential investors may wish to use the information to help establish bid prices for the loans. Another application of the seasoned model highlighted in the case study is its ability to help lenders decide upon the risk of a second lien or Home Equity Loan on top of the first.