CoreLogic's Broker Database Offers Statistics on Early Payment Defaults
-- Small percentage of brokers account for most mortgage losses --
Chicago, IL. October 23, 2006 –CoreLogic, the leading provider of mortgage risk assessment and fraud prevention solutions, has released at MBA’s 93rd Annual Conference & Expo findings from its broker management database which shows that seven percent of brokers account for 63 percent of early payment defaults, with the riskiest one half of one percent of brokers accounting for 70 percent of all losses.
CoreLogic’s broker database tracks more than 38 million loans and 190,000 brokers and is the engine powering ThirdParty Scorecard™, a Web-based software tool that helps residential mortgage lenders evaluate and manage the risk associated with their broker network. ThirdParty Scorecard is quickly becoming the de-facto standard for broker assessment and management, due to its unique ability to accurately identify loss related risk and provide comparative industry and geographically based benchmarks and trending.
These most recent statistics illustrate the key link brokers play in the risk management chain and why broker monitoring and management tools are critical to the financial prospects of wholesale originators. “These figures are based on predicted first year loss concentrations,” said Mark Fleming, chief economist for CoreLogic. “While the first year is generally characterized by low rates of default and in most cases little loss, when losses do happen, they are big.”
ThirdParty Scorecard allows a mortgage originator to review a broker’s history and loan submission behavior and provides a summary report based on that information. The technology leverages a database compiled from more than 80 organizations including mortgage insurers, investors and servicers. The collateral risk measure (CRM) and accompanying report expose detrimental agent patterns, such as adverse selection, alerting the lender to consider a more extensive review.
“We are confident that by applying the ThirdParty Scorecard technology to our business it will assist us in identifying more risk laden pockets of our business,” said Elizabeth Barnes, senior vice president, operations at Sebring Capital, a wholesale residential mortgage lender specializing in subprime and alt-A products. “Based on our joint work with CoreLogic this tool will have a significant impact on reducing loss exposure and loan origination costs.”
“Our goal at CoreLogic is to safeguard and streamline the loan process for the lender as much as possible,” said Steve Schroeder, co-founder and chief executive officer of CoreLogic. “The use of ThirdParty Scorecard helps lenders reduce overall loan default exposure by detecting higher risk agents at the front end of the loan process. This proactive approach increases efficiency by accelerating agent approvals, while isolating a limited number of candidates for further investigation.”
About CoreLogic, A C&S Company
Sacramento, Calif.-based CoreLogic, A C&S Company, is the leading provider of collateral risk-analysis and management technology and services to the U.S. mortgage banking industry. Since 1997, the mortgage industry has relied on CoreLogic to enable risk management and workflow process support. Using CoreLogic technology, mortgage originators and investors are able to increase profitability and loan quality by making more informed lending and investment decisions. The CoreLogic suite of property information tools provides the data, comprehensive geographic coverage, ease-of-use and accessibility the mortgage industry needs. For more information about CoreLogic, visit www.corelogic.com.
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