Digital Risk: Data Reveals Borrowers That Pay Off Revolving Debt More Likely To Redefault On Mortgage

MAITLAND, Fla., Aug. 1, 2012 /PRNewswire/ -- Digital Risk, the nation's largest provider of mortgage risk, compliance and transaction management solutions, today revealed Veritas, a mortgage analytics platform built on a vast repository of specific borrower, property and local real estate market data which provides multi-dimensional insight into the many facets of risk.  The result is the most reliable method for understanding risk at the root cause, whether systemic or operational.

"The mortgage industry is relying on outdated methods to determine risk," said Peter Kassabov, Digital Risk's chairman and chief executive.  "During the mortgage crisis, high FICO borrowers encountering distress defaulted in huge numbers, yet we still depend heavily on that one score along with CLTV to make lending and loan modification decisions.  Veritas has shown there are many more impactful variables that can predict future risk with much more accuracy, and provide the reason why that risk exists.  Veritas brings data and analytic confidence to the entire market, including origination, default and servicing."

Digital Risk used Veritas to analyze data from more than five million loans originated from 2006 – 2011, including a separate analysis of 100,000 loan modifications.  Analysis of the data demonstrates that current one-dimensional risk prediction offerings, even when retooled and rebranded, are not as meaningful without the discreet, multi-dimensional borrower models and methodology built into the proprietary platform.  For example, data revealed borrowers eager to pay revolving debt following a loan modification are more likely to redefault.  This information represents a historical shift in how the mortgage industry understands predictive factors.

While a single static score can display known borrower behavior, it does not take into account the ever-changing life factors that discriminate among borrowers, influence operational risk and are required to understand how those factors may affect the future.  

"Veritas undoes many of the foundational beliefs about the loan lifecycle, from origination, to servicing, and even pricing the loan for sale into the secondary market," said Thomas Showalter, chief analytics officer at Digital Risk. "We must create new models for measuring risk that are more discriminating, holistic and dynamic or the industry will repeat the mistakes of the past.  Veritas is the first multi-dimensional engine of its kind to blend an assessment of systemic risk with an index of operational risk, achieving an ideal blend of people, processes, and technology to create a more complete picture of loan risk."

Veritas allows the mortgage industry to calculate future risk using a multi-dimensional model to instill data confidence.  Analytic and risk modeling services are provided as part of Digital Risk's mortgage risk, compliance and transaction management solutions.  For additional information, visit www.digitalrisk.com or call 407-215-2908.

About Digital Risk
Digital Risk is the largest provider of mortgage risk and compliance management solutions.  The company provides buyers and sellers of mortgages and mortgage backed securities the analytical, technological and risk management services they need to achieve their goals.  The Digital Risk platform delivers transparency at the loan level and precise risk assessment throughout the entire mortgage value chain.  With over 1,400 U.S. based professionals, the company counts the nation's leading servicers, originators, aggregators and investors among its clients.  Digital Risk is independent and not affiliated with an originator, issuer, servicer or investor.  Headquartered in Orlando, Digital Risk has additional operations in New York, Dallas, Denver, Boca Raton and Jacksonville.

Contact: Brandie Young
[email protected]
510-599-2785

SOURCE Digital Risk, LLC