Data Providers Partner to Capitalize on the Need for Greater Mortgage-Level Transparency
The mortgage finance industry is growing increasingly concerned that secondary market investors are not satisfied with the level of data available at the mortgage-level -- at least that's the view of data providers that are creating strategic partnerships in order to unveil new platforms they hope will address the associated perception of risk and draw in more clients. Equifax is partnering with CoreLogic, formerly known as First American CoreLogic, to provide a new data report for mortgage-backed securities (MBS) investors. With it, investors have access to up-to-date borrower credit scores and other credit data for non-agency MBS. According to Equifax, the ABS Credit Risk Insight Direct provides performance on past mortgages, second-lien balances, delinquencies, monthly payments along with the credit scores. "The prevalence of hidden risks, such as unreported second lien balances and loans mis-reported as owner-occupied at origination, underscore the need for solutions to help investors accurately value non-agency mortgage-backed securities," said Steve Albert, vice president of Equifax Capital Markets. Credit reports are valid for 90 days from the date of the report and cannot be older than 90 days at the time of closing a mortgage. Equifax launched its Undisclosed Debt Monitor tool that watches borrower activity during that 90-day quiet period. According to Equifax, borrowers spent roughly $142m in car purchases in that 90-day window last year. These were transactions potentially overlooked by underwriters. Being able to monitor credit performance is becoming the single most important tool in the life of a mortgage, from underwriting up to secondary, said a source at Equifax, the consumer data provider. And more firms are partnering to meet this new demand. “Undisclosed debt is a growing challenge. It is the biggest issue in mortgage finance,” the source said. To cure the problem, Equifax is working to provide more credit transparency to mortgage underwriters and investors. Equifax isn’t the only one trying to help originators and investors cut down on risk. S&P Valuation and Risk Strategies, a statistics unit within the credit-rating agency, Standard & Poor’s, will provide individual loan-level information on US residential mortgage-backed securities (RMBS) through the 1010data platform. 1010data provides data warehouse and other services to the MBS market. The S&P Valuation and Risk Strategies RMBS database includes originations details, delinquency status, current balance, current interest rate. The granular loan-level data includes static origination details, as well as delinquency status, current balance and the current interest rate. Investors can also tailor the new data around each individual loan with a MBS portfolio. “Transparency is at the forefront of investors’ minds,” said Greg Munves, vice president, 1010data, “and the need to easily consume robust loan-level data to track market and portfolio exposure is a key concern.” Write to Jon Prior.