Strategic Analytics Enhances Mortgage Risk Modeling
Strategic Analytics Inc., the leading provider of stress testing and forecasting solutions for retail lenders, announced that its patented mortgage risk model is now fueled by one of the largest repositories of loan-level mortgage data within the global financial services industry.
Strategic Analytics has entered into a dynamic relationship with BlackBox Logic, LLC, a widely-respected provider of loan-level mortgage data and cash flow analysis for securitized mortgage products, to provide Strategic Analytics with data and performance updates for more than 7200 residential mortgage-backed securities representing more than 92% of all US mortgage loans. BlackBox’s BLIS(TM) service transforms data from bond trustees and securities issuers into usable business information through its proprietary process of normalizing and cleansing.
Strategic Analytics’ expanded mortgage database, together with its patented forecasting and stress-testing analytical software, provides clients with an ability to analyze portfolios with a degree of accuracy not possible with thinner data sets or weaker models. Strategic Analytics’ software can access massive data sets to produce high-level analysis as well as drill down into millions of loan-level segments, including metropolitan area, asset types, and loan types. The unique long-term perspective of Strategic Analytics’ software combined with this expanded database enables industry-leading forecasting, stress-testing and volatility analysis.
Strategic Analytics’ mortgage risk model was the only commercially available forecasting solution to predict the US Mortgage Crisis. In 2005, analysis of industry-wide U.S. mortgage data utilizing Strategic Analytics’ LookAhead(TM) Software showed that the quality of new originations was deteriorating even though the economy was relatively unchanged and credit scores had not moved. By 2006 and 2007, new originations were of dramatically worse quality and Strategic Analytics’ analysis indicated that the mortgage market was heading for an enormous collapse.
The fall in house prices beginning in 2007 meant that distressed loans could no longer be rescued by refinancing. While virtually all other commercial modeling platforms showed no visible stress until 2007 when housing price depreciation was evident, Strategic Analytics’ approach provided accurate predictions of loan losses two years earlier.
Strategic Analytics software and services are used by 8 of the top 10 banks with the largest U.S. consumer loan portfolios as ranked by American Banker.
Source: Strategic Analytics Inc.