New Trans Union Mortgage Risk Indicator

In an effort to better predict future pay history exposure,
Trans Union rolled out their version of a credit crystal ball in the
form of a new Mortgage Risk Indicator.

To improve visibility into the hidden risk of many of the mortgage assets currently plaguing the financial system and capital markets, TransUnion has developed a new solution called TransUnion Consumer Risk Indicators.

"The TransUnion Consumer Risk Indicators for RMBS (Residential Mortgage-backed Securities) and Whole Loans bring comprehensive, current and historical loan consumer credit information to the mortgage industry for in-depth risk analysis."

"Billions of dollars in mortgage securities were traded without visibility into the risk of the underlying borrowers of the loans backing the securities, focusing instead on pool-level home price appreciation (HPA) and initial loan-to-value (LTV)," said Jeff Hellinga, president of TransUnion's U.S. Information Services division. "This was sufficient as long as property values continued to rise. But now, with the collapse of the housing market, direct insight into the actual risk of the underlying borrowers is critical. This is particularly relevant given the recent creation of the Public-Private Investment Program (PPIP), which is designed to draw private capital into the market to facilitate price discovery of legacy assets and the expansion of other government programs, such as the Trouble Assets Relief Program (TARP) and the Term Asset-Backed Securities Loan Facility (TALF)."

"Sophisticated traders and investors are always looking for an information edge and these solutions provide that, enabling early adopters to capitalize on the superior insights generated," said George Livermore, chief executive officer of First American CoreLogic. "In pre-release reviews with select hedge funds and investment banks, we have received very positive feedback."

The TransUnion Consumer Risk Indicators incorporates "sophisticated proprietary matching algorithms" jointly developed between First American CoreLogic and TransUnion.

TransUnion's Consumer Risk Indicators also provides new information previously unavailable for risk assessment of "Whole Loan" bids and portfolio monitoring.

While updated consumer reports are commonly used in this area, TransUnion's solution provides data specifically proven to predict risk. "This time-series is more predictive than the updated consumer reports currently used in the industry," added Hellinga. "We've also developed it to be easily incorporated into the existing bid process."


OUR OPINION:
What does this Trans Union Mortgage Risk Indicator mean to the public?

Well, it will depend on how much faith and weight is given to the
new product, to begin with.

What I sense is that this may have both a good and bad impact
depending on what the borrower is attempting to accomplish.

If there is a short sale proposed, this new tool may serve to be
further proof the lender should accept the deal on the table and
may lean on the Trans Union Consumer Risk Indicator to cover
the loss mitigator's opinion that the loan cannot be saved with the
current borrower and an offer to purchase should be accepted.

However, for the homeowner who is attempting to do a Loan
Modification or a Mortgage Relief program, this new tool could
prove to be an obstacle to successfully retaining the property.

The more conservative the Consumer Risk Indicator is, the more
difficult it may become for the homeowner to convince the servicer
that they will be able to make the payments if the loan were to be
modified. Thus, this new tool could potentially have a further
negative impact on the Housing Markets in general and Recovery.

If loans are not modified, it will surely lead to an increase in the
foreclosure numbers for the balance of 2009. Long term Recovery
would likely have zero chance of beginning any time before mid-2010.