Quantrix, a provider of business modeling and analytics solutions, has created an online, interactive mortgage modification model.
Using techniques from the Mod in a Box loan modification model created by the Federal Deposit Insurance Corp. (FDIC) in conjunction with user-provided and current-market data, servicers can model the impact of adjusting housing-to-income (HTI) ratios as well as house values, Quantrix says.
‘Lenders are modifying tens of billions of dollars worth of mortgage loans, yet failure rates in many cases still exceed 50 percent," says Chris Houle, the company's CEO. "Foreclosure is perhaps the worst option for lenders in terms of profitability, yet the current FDIC model is neither robust enough to test assumptions and analyze options, nor does it accommodate rapidly changing market dynamics."
With Quantrix's model, users enter loan-specific criteria such as loan amount, interest rate, amortization term, current unpaid principal balance, and months past due along with market-specific data such as current property value, current Freddie rate, and average housing price appreciation forecast.
For demonstration purposes, the model then provides three scenarios: FDIC-HTI Tiers, Federal Housing Adminstiration (measuring 29% HTI) and a conservative case (measuring 25% HTI), along with the dollar benefit of each scenario's modification over that of foreclosure.
Quantrix offers a customized version of the model in which lenders can incorporate data and structure specific to their portfolios. The model can then be scaled to evaluate large pools of loans.