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Radian’s diversified business model covers the entire mortgage and real estate spectrum

Expertise in managing mortgage risk creates unique opportunities for customers

HousingWire sat down with Derek Brummer, Senior Executive Vice President of Mortgage Insurance and Risk Services at Radian, to learn how Radian’s business models and diversification strategies provide the company with a competitive edge.

What differentiates Radian from the MI competition? 

At Radian, we’re in the business of ensuring the American dream responsibly and sustainably, whether it’s from our mortgage insurance or our mortgage, title or real estate services.

This strong corporate purpose underscores our drive to be a valuable business partner for our MI customers along with building a market-leading residential mortgage and real estate enterprise and delivering a diversified set of high-value risk and transaction management products and services.

We are doing this through investing in next-generation digital business models that are powered by data, analytics and technology and delivered to participants across the value chain, and are designed to drive strong growth and value creation and shareholder returns.

Our market leading position reflects the fundamental strength of our business model, the value of our customer relationships, consistent delivery of innovative customer-centric solutions and the dedication of our entire team. All this differentiates Radian from the MI competition.

Why is a diversified business model as ONE Radian better for Radian and better for your customers? 

At Radian, our diversified business model means we cover the entire mortgage and real estate spectrum and have a deep and comprehensive understanding of our customers and their business needs.  Across Radian, from a digital perspective, we leverage data and our proprietary analytics, powered by technology, to deliver products and solutions that meet the needs of our customers.

We believe our diversification strategy provides us with a competitive advantage that will deliver enhanced returns and value over the long-term. Our goal is to continue to deliver more and more relevant products, services and solutions to our customers and become an indispensable partner. We are doing that today — approximately a third of Radian’s customers across the enterprise are currently active in multiple products offered by our businesses.

For our customers, it means efficient vendor-management, customized solutions and flexible options that make sense for their business, as well as access to what we believe is the most comprehensive mortgage insurance and related products and advisory, analysis and support services in the residential real estate space. That’s why we believe that our diversified business model is a win-win for our customers and us.

What are some of the ways that Radian partners with its lender customers from a credit risk management perspective? 

We believe our unique risk analytic frameworks which are focused on loan attributes and originator and servicer insights position us to write quality business with the right customers and to drive strong-risk adjusted returns.

One of Radian’s most important strengths is our understanding of and expertise in managing all aspects of mortgage risk (e.g., credit, operational, origination, portfolio and servicing risk). We’ve invested in best in class mortgage risk analytics. That’s not only about the loan; it’s about the customer, including the originator and servicer. Our loan underwriting and loan due diligence platforms also create unique opportunities for us and our customers.

We utilize proprietary lender and servicer segmentation frameworks to guide our business strategies. And, when we look at our lender customers, we use a variety of quantitative and qualitative metrics to rank order our customers both on the servicing and lender origination side.  We also use our data and risk assessment expertise to help our customers better understand their own performance and risk profile. 

You introduced RADAR Rates earlier this year. How has it been received in the market?

The introduction of RADAR Rates, our black box pricing option, earlier this year has been met with enthusiasm by our customers as another MI pricing option available for doing business with Radian. 

While a majority of our business today is delivered through RADAR Rates, we continue to offer various options for doing business with Radian that are based on customer needs and preferences, and align with our risk/return appetite. Our ability to offer innovative options for our customers that are appropriately balanced with our risk, return and portfolio objectives continues to differentiate us in the industry.

While price competition is always present in our industry, the overall increased granularity of our pricing options, including RADAR Rates, allows us to shift pricing, both up and down, to more dynamically shape the risk profile of our MI portfolio and maximize the Economic Value of the business we write. 

There’s a lot of talk about incorporating data in how Radian operates. How is data a key piece of how you do business?

At Radian, we have access to tremendous amounts of data from a variety of sources such as mortgage origination data, mortgage servicing data, securitization data, and a broad base of real estate data along with public and third-party data. From a Radian perspective, data is at the core of how we think about the business. We are using data to better understand the needs of our customers, we’re using it to better understand our portfolio and manage the risk we take, we’re using it to make informed pricing strategy decisions and we’re using it to design and improve processes. Most importantly, from a customer perspective we’re using it to design and improve products, services and solutions that help our customers achieve their business objectives.

Essentially, data along with our proprietary analytics platform is helping us to deliver products and services that are tailored to participants across the value chain and thereby to drive strong growth, value creation and returns for our stakeholders.

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