April, 2012

TheMReport — News and strategies for the evolving mortgage marketplace.

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DS-News-2.2917x9.125.pdf 1 3/1/2012 4:35:22 PM FEATURE ANALYTICS The Source of Confidence is Certainty. select custom loan sets (including loans backing deals, bonds, sectors, vintages, loan types, etc.), and portfolios and stratify those data sets to view current or past descriptive and performance characteristics. Mortgage Builder has seen a shift in the marketplace with respect to loan origination systems. According to Himebaugh, the majority of its clients in the past few years have engaged the company for its Software as a Service (SaaS) option. The company reduces its clients' risk exposure by removing the burden of IT support, handling compliance updates, providing cyber liability insurance, and more. On top of that, clients achieve the above benefits with a "pay per closed loan" pricing structure. Interthinx's Mortgage Loan Assessment uses a proprietary loan-level model that incorporates key macroeconomic data and enhanced loan characteristics to create forecasts that remain accurate throughout the life of the loan. The Next Step Donnan of Kroll Factual Data pointed to information security as a critical consumer concern as the loan approval process becomes more complicated and technical. An "auditable chain of custody" will be required so that sensitive data remains secure throughout all steps of the loan process. Donnan also said that "the entire industry" will be discussing the technology and security around mobile loan processing, otherwise known as the mobile app. Himebaugh at Mortgage Builder added another thing to look out for as technology, including modeling, continues to advance: "It's foreseeable that there will be a keen interest in the not too distant future as to identifying and attracting individuals who were previously homeowners." Whether now or in the future, the reporting functionality of a financial institution's predictive modeling platform will be key—"the capacity to not only collect relevant information, but also massage it into useful and actionable items is critical," as Himebaugh said. Given that no two lenders are exactly the same, the platforms should allow firms the flexibility "to create and adjust the reports they need to identify current issues and future trends so that they can be proactively addressed." In 2002, the Oakland A's general manager, who was played by Pitt in Moneyball, proactively addressed his team's needs—i.e., big holes in the lineup and little money to fill them—with a combination of daring and data mining. The result was 103 wins and the AL West championship, despite spending nearly $65 million less on payroll than another team in their division and less than all but two other teams in the entire Major League. In 2012, where doing more with less is still the drill, most lenders would welcome that numbers game. C M Y CM MY CY CMY K Turn to the original. First American Data Tree provides "Just as a map does not equal the land it describes, models do not fully characterize the systems they describe. Users need to understand the strengths and weaknesses of their models." — Mike Smith, Interthinx, THE M REPORT | 65 lenders and servicers a suite of standardized and customizable products and services, designed to streamline operations and provide the necessary intelligence for making sound lending decisions. First American Data Tree LLC makes no expressed or implied warranty respecting the information presented and assumes no responsibility for errors or omissions. ©2012 First American Data Tree LLC, a division of First American Financial Corporation. All rights reserved. ORIGINATION SERVICING ANALYTICS SECONDARY MARKET

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