First American Subordinate Lein Outsourcing Releases New "TRU" Scoring Model
—Leveraging First American Data, Analytics and Technology Builds an Accurate Pricing and Loss Reserve Solution for Mortgage Lenders and Servicers—
September 9, 2008, DALLAS
First American Subordinate Lien Outsourcing, a member of The First American Corporation (NYSE: FAF) family of companies and leader in subordinate lien data products and analytic solutions, today announced the debut of its Tool for Reserve Underwriting (TRUSM ) Scoring Model. The TRU Scoring Model provides a valuation solution that defines the potential loss, predicted recovery and velocity of recovery on a monthly timeline for a subordinate loan pool.
Created to address the risk management needs of Wall Street and hedge fund clients, the TRU Scoring Model delivers gross recovery cash-flow projections on a 24- to 36-month basis for a pool of performing and/or nonperforming subordinate lien assets. The solution projects recovery based on internal collection experience with similar types of collateral derived from a robust set of delinquency and collateral characteristics. It also uses securities prepayment and default data matched with market pricing to determine forward market assumptions and the resulting cash-flow projections.
The solution provides the ability to evaluate various risk levels and project losses for a group of loans by determining the pool’s ultimate recovery and market pricing. The TRU Scoring Model is enhanced with the capability to analyze a borrower’s ability to pay and to evaluate underlying property worth at the loan level. The flexibility of the solution allows for its application in any stage of purchasing or owning a loan pool, from due diligence on the buy-side to managing losses in a whole loan portfolio.
“It has been an invaluable solution in managing performance expectations in relation to market servicing benchmarks for the 100,000 distressed junior lien assets that we monitor in our operation,” said Brett Benson, director of analytics at First American Subordinate Lien Outsourcing, who previously held the position of managing director for Bear Stearns in its mortgage trading department. “In addition, the use of our data products and analytic scores provide a powerful complementary set of metrics for assessing potential losses related to subordinate liens and home equity lines of credit.”
The combination of First American Subordinate Lien Outsourcing’s experience in junior lien loss management, servicing, analytics and pool valuations with First American’s vast data resources gives the company a unique and valuable perspective when predicting cash-flow behavior for a given pool of assets.
About The First American Corporation
The First American Corporation (NYSE: FAF) is a FORTUNE 500® company that traces its history to 1889. With revenues of approximately $8.2 billion in 2007, it is America’s largest provider of business information. First American combines advanced analytics with its vast data resources to supply businesses and consumers with valuable information products to support the major economic events of people’s lives, such as getting a job, renting an apartment, buying a car or house, securing a mortgage and opening or buying a business. The First American Family of Companies, many of which command leading market share positions in their respective industries, operate within five primary business segments, including: Title Insurance and Services, Specialty Insurance, Information and Outsourcing Solutions, Data and Analytic Solutions, and Risk Mitigation and Business Solutions. More information about the company and an archive of its press releases can be found at www.firstam.com.