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local edition or ig i nat ion ANALYTICS CoreLogic, Urban Institute Come Together in Strategic Alliance S e c on da r y M a r k e t a na ly t ic s se r v ic i ng The Urban Institute will use the Irvine-based company's data to fuel the new housing finance think tank. california // CoreLogic and the Urban Institute have formed a strategic alliance to power further economic and social policy research, the two groups announced. Through the alliance, CoreLogic's data will be used to power the research conducted by the Urban Institute's newly formed Housing Finance Policy Center. According to a release from CoreLogic, the alliance's principal goal is to enable the Housing Finance Policy Center to enhance its analytical work. In support of that objective, the Urban Institute will produce data-driven reports, policy analyses, and white papers to inform public policy. "We believe this is a real win-win relationship," said Faith Schwartz, SVP of the Government Solutions Group at CoreLogic. "The Urban Institute is a prominent and well-respected research organization. We couldn't be happier to work with them." Laurie Goodman, director of the Urban Institute's Housing Finance Policy Center, agreed. "We are very pleased to have a strategic alliance with CoreLogic. They are an incredible provider of data; this data is critical to doing independent, broad-based public policy research in the housing finance area. It's our hope that the alliance will continue to grow from here," Goodman said. To kick off the initiative, CoreLogic and the Urban Institute co-hosted a daylong event in the nation's capital titled "Data, Demand and Demographics: A Symposium on Housing Finance." The event featured keynote presentations and discussions on a number of topics, including future homeowner and rental demographics, increasing liquidity 56 | The M Report and transparency in the secondary markets, and how to best improve credit availability. Chief among the speakers was Gene Sperling, director of the National Economic Council and assistant to President Obama on economic policy. "This event has given our strategic alliance some great momentum," Schwartz said. "When we look at the quality of speakers, panelists, and the turnout, it's easy to get excited about what this lenders still have difficulty combating: undisclosed debt. In a recent white paper, Equifax published results of its research into undisclosed debt and its recommendation for how to deal with this difficult hazard. Ultimately, Equifax said, "The results are somewhat surprising and disturbing." "Undisclosed debt poses a risk even for lenders with conservative underwriting standards, alliance can bring to the table in terms of housing policy insight." experienced professionals, and creditworthy applicants," Equifax asserted in its paper. Nearly one-fifth of borrowers apply for at least one new line of credit during the period between their credit profile review and the closing on their mortgage loan—deemed the "quiet period" by Equifax. While some homeowners sign up for store credit as they purchase new furnishings or household items—not realizing this could impact their credit— others intentionally apply for multiple mortgage loans at the same time. Report Examines Risks of Undisclosed Borrower Debt Lenders are still exposed when consumers don't disclose the totality of their debt obligations. GEORGIA // Over the past few years, lenders and underwriters revamped their standards to reduce risk, but Equifax says there's one challenge many "Most borrowers are honest, but whether undisclosed debt during the quiet period is intentional or not, it poses a threat to lenders, regardless of their underwriting process," said Craig Crabtree, SVP and general manager of Equifax Mortgage Services. About 36 percent of borrowers who opened at least one trade line during the quiet period increased their debt-to-income ratio by at least 3 percent, which is significant for lenders. "For lenders, undisclosed borrower debt incurred during the underwriting process presents a very real risk, since a 3 percent or more increase in borrower DTI can result in expensive loan repurchase demands by the secondary market or penalties by regulators," Equifax stated in its white paper. Borrowers with the highest and lowest FICO scores tend to present less of a risk when it comes to undisclosed debt, according to Equifax. Those borrowers most likely to incur undisclosed debt during the quiet period are those with FICO scores between 620 and 720. Some lenders attempt to prevent undisclosed debt by pulling a borrower's credit profile again immediately prior to closing, but as Equifax points out, this can be cumbersome and inefficient. Instead, Equifax recommends continual credit monitoring throughout the application and closing process. Lenders can receive daily alerts of borrower credit activity and can adapt as needed. "With early warning, lenders can proactively discuss the impact of new debt with the borrower, obtain additional documentation needed for the secondary market, or change the terms of the loan," Crabtree said. "Lenders who are able to continuously monitor credit activity during the quiet period can significantly reduce their buy-back risk and provide much better service to borrowers."