Value Creation Institution has announced through its affiliate, Buckley Management Advisors LLC, that its patent-pending system for asset valuation, ValueScout, was recently tested with actual data and was found to be 96% to 98% accurate in prediction of loan default.
The test was conducted to demonstrate the effectiveness of the ValueScout modeling technique to predict outcome of residential mortgage loans. Buckley Management Advisors supplied loan servicing data where the outcome is known.
Within the data set, 964 loan records were used to define the model, while 4,338 were used to validate it. Loans were stratified based on location, property type and loan type. Records were then randomly selected within the stratifications so that the sample reflected the entire data set. The model was applied to the reserve data, and the results compared to the actual outcome.
ValueScout's analytics engine employs regression techniques, as well as Monte Carlo and scenario analyses, to create benefits across multiple loan functions, the company says.
"The tools we have patented and deployed have already proven themselves in the aerospace and medical device industry, where accurate reliable predictions for product performance are a mandate for business success,’ says Anthony Lemus, senior partner at Value Creation Institute.
SOURCE: Value Creation Institute