In the past few days I’ve read several articles discussing how lenders are taking various actions to reduce their exposure to toxic mortgages – some, like Bank of America, are engaging new principal repayment programs.*  Others, (including Bank of America) are using existing incentive programs to fast-track the approvals of short-sales to stunt their losses and acquire stronger lenders on existing real-estate assets. Given the range of options available to lenders, there are significant decisions to make regarding the creditworthiness of existing consumers and which treatment strategies are best for each borrower, these decisions important for assessing credit risk, loan origination strategies and loan pricing and profitability.  Experian analysis has uncovered the attributes of borrowers with various borrowing behaviors: strategic defaulters, cash-flow managers, and distressed borrowers, each of whom require a unique treatment strategy. The value of credit attributes and predictive risk scores, like Experian Premier Attributes and VantageScore® credit score, has never been higher to lenders. Firms like Bank of America are relying on credit delinquency attributes to segment eligible borrowers for its programs, and should also consider that more extensive use of attributes can further sub-segment its clients based on the total consumer credit profile. Consumers who are late on mortgage payments, yet current on other loans, may be likely to re-default; whereas some consumers may merely need financial planning advice and enhanced money management skills. As lenders develop new methods to manage portfolio risk and deal with toxic assets on their portfolios, they should also continue to seek new and innovative analytics, including optimization, to make the best decisions for their customers, and their business. *  LA Times, March 25, 2010, ‘Bank of America to reduce mortgage principal for some borrowers’

By: Wendy Greenawalt Financial institutions have placed very little focus on portfolio growth over the last few years.  Recent market updates have provided little guidance to the future of the marketplace, but there seems to be a consensus that the US economic recovery will be slow compared to previous recessions. The latest economic indicators show that slow employment growth, continued property value fluctuations and lower consumer confidence will continue to influence the demand and issuance of new credit. However, the positive aspect is that most analysts agree that these indicators will improve over the next 12 to 24 months. Due to this, lenders should start thinking about updating acquisition strategies now and consider new tools that can help them reach their short and long-term portfolio growth goals. Most financial institutions have experienced high account delinquency levels in the past few years. These account delinquencies have had a major impact to consumer credit scores. The bad news is that the pool of qualified candidates continues to shrink so the competition for the best consumers will only increase over the next few years. Identifying target populations and improving response/booking rates will be a challenge for some time so marketers must create smarter, more tailored offers to remain competitive and strategically grow their portfolios. Recently, new scores have been created to estimate consumer income and debt ratios when combined with consumer credit data. This data can be very valuable and when combined with optimization (optimizing decisions) can provide robust acquisition strategies. Specifically, optimization / optimizing decisions allows an organization to define product offerings, contact methods, timing and consumer known preferences, as well as organizational goals such as response rates, consumer level profitability and product specific growth metrics into a software application. The optimization software will then utilize a proven mathematical technique to identify the ideal product offering and timing to meet or exceed the defined organizational goals.  The consumer level decisions can then be executed via normal channels such as mail, email or call centers. Not only does optimization software reduce campaign development time, but it also allows marketers to quantify the effectiveness of marketing campaigns – before execution. Today, optimization technology provide decision analytics accessible for organizations of almost any size and can provide an improvement over business-as-usual techniques for decisioning strategies. If your organization is looking for new tools to incorporate into existing acquisition processes, I would encourage you to consider optimization and the value it can bring to your organization.

By: Kari Michel Lenders want to find new customer through more informed credit risk decisions and use new types of data relationships to cross-sell.   The strategic goals of any company are to get more customers and revenue while reducing costs on the operating side and the credit loss side.  Some of the ways to meet these goals are to improve operating efficiency in creating and managing credit attributes, which represent the building blocks of how lenders make customer decisions. Lenders face many challenges in leveraging data from multiple credit and non-credit sources (e.g. credit bureaus) and maintaining data attributes across multiple systems. Furthermore, a lack of access to raw data makes it difficult to create effective, predictive attributes. Simply managing the discrepancies between specifications and code can become a very time consuming effort.  Maintaining a common set of attributes used in many types of scorecards and decision types often becomes difficult.  As a result, there is a heavy reliance on external people and technical resources to find the right tools to try and pull the data sources and attributes together. In an ideal situation, a lender should be able to easily access raw data elements across multiple sources and aggregate the data into meaningful attributes. Experian can offer these capabilities through its Attribute Toolbox product, allowing one or more systems to access a common set of standard analytics.  A set of highly predictive attributes, Premier Attributes, are available and offers a much more effective solution  for managing standard attributes across an enterprise.  With the use of these tools, lenders can decrease maintenance costs by quickly integrating data and analytics into existing business architecture to make profitable decisions.  

In the past few days I’ve read several articles discussing how lenders are taking various actions to reduce their exposure to toxic mortgages – some, like Bank of America, are engaging new principal repayment programs.*  Others, (including Bank of America) are using existing incentive programs to fast-track the approvals of short-sales to stunt their losses and acquire stronger lenders on existing real-estate assets. Given the range of options available to lenders, there are significant decisions to make regarding the creditworthiness of existing consumers and which treatment strategies are best for each borrower, these decisions important for assessing credit risk, loan origination strategies and loan pricing and profitability.  Experian analysis has uncovered the attributes of borrowers with various borrowing behaviors: strategic defaulters, cash-flow managers, and distressed borrowers, each of whom require a unique treatment strategy. The value of credit attributes and predictive risk scores, like Experian Premier Attributes and VantageScore® credit score, has never been higher to lenders. Firms like Bank of America are relying on credit delinquency attributes to segment eligible borrowers for its programs, and should also consider that more extensive use of attributes can further sub-segment its clients based on the total consumer credit profile. Consumers who are late on mortgage payments, yet current on other loans, may be likely to re-default; whereas some consumers may merely need financial planning advice and enhanced money management skills. As lenders develop new methods to manage portfolio risk and deal with toxic assets on their portfolios, they should also continue to seek new and innovative analytics, including optimization, to make the best decisions for their customers, and their business. *  LA Times, March 25, 2010, ‘Bank of America to reduce mortgage principal for some borrowers’

By: Wendy Greenawalt Financial institutions have placed very little focus on portfolio growth over the last few years.  Recent market updates have provided little guidance to the future of the marketplace, but there seems to be a consensus that the US economic recovery will be slow compared to previous recessions. The latest economic indicators show that slow employment growth, continued property value fluctuations and lower consumer confidence will continue to influence the demand and issuance of new credit. However, the positive aspect is that most analysts agree that these indicators will improve over the next 12 to 24 months. Due to this, lenders should start thinking about updating acquisition strategies now and consider new tools that can help them reach their short and long-term portfolio growth goals. Most financial institutions have experienced high account delinquency levels in the past few years. These account delinquencies have had a major impact to consumer credit scores. The bad news is that the pool of qualified candidates continues to shrink so the competition for the best consumers will only increase over the next few years. Identifying target populations and improving response/booking rates will be a challenge for some time so marketers must create smarter, more tailored offers to remain competitive and strategically grow their portfolios. Recently, new scores have been created to estimate consumer income and debt ratios when combined with consumer credit data. This data can be very valuable and when combined with optimization (optimizing decisions) can provide robust acquisition strategies. Specifically, optimization / optimizing decisions allows an organization to define product offerings, contact methods, timing and consumer known preferences, as well as organizational goals such as response rates, consumer level profitability and product specific growth metrics into a software application. The optimization software will then utilize a proven mathematical technique to identify the ideal product offering and timing to meet or exceed the defined organizational goals.  The consumer level decisions can then be executed via normal channels such as mail, email or call centers. Not only does optimization software reduce campaign development time, but it also allows marketers to quantify the effectiveness of marketing campaigns – before execution. Today, optimization technology provide decision analytics accessible for organizations of almost any size and can provide an improvement over business-as-usual techniques for decisioning strategies. If your organization is looking for new tools to incorporate into existing acquisition processes, I would encourage you to consider optimization and the value it can bring to your organization.

By: Kari Michel Lenders want to find new customer through more informed credit risk decisions and use new types of data relationships to cross-sell.   The strategic goals of any company are to get more customers and revenue while reducing costs on the operating side and the credit loss side.  Some of the ways to meet these goals are to improve operating efficiency in creating and managing credit attributes, which represent the building blocks of how lenders make customer decisions. Lenders face many challenges in leveraging data from multiple credit and non-credit sources (e.g. credit bureaus) and maintaining data attributes across multiple systems. Furthermore, a lack of access to raw data makes it difficult to create effective, predictive attributes. Simply managing the discrepancies between specifications and code can become a very time consuming effort.  Maintaining a common set of attributes used in many types of scorecards and decision types often becomes difficult.  As a result, there is a heavy reliance on external people and technical resources to find the right tools to try and pull the data sources and attributes together. In an ideal situation, a lender should be able to easily access raw data elements across multiple sources and aggregate the data into meaningful attributes. Experian can offer these capabilities through its Attribute Toolbox product, allowing one or more systems to access a common set of standard analytics.  A set of highly predictive attributes, Premier Attributes, are available and offers a much more effective solution  for managing standard attributes across an enterprise.  With the use of these tools, lenders can decrease maintenance costs by quickly integrating data and analytics into existing business architecture to make profitable decisions.