Read Larry Connors' blog – Short Term Trading Strategies
Observed Brent Lippman, CEO of Response Analytics, "Until now, investors would have been taking a shot in the dark with pricing distressed mortgage portfolios and mortgage-backed securities. That's the key reason that the market for them froze. But now optimization technology will allow them to confidently assess one of the most discounted assets currently available, and to go on to create more value than the current market expects."
As the Response Analytics team has found, this is because borrower behavior is not just a factor of income and FICO score, but is dependent on a wide range of other variables. Notes Mr. Lippman, "By applying advanced behavioral modeling and optimization technology, our Distressed Portfolio Management solution can establish the optimized individualized workout for each distressed loan in the portfolio, based on terms that have a much higher probability of being met. Furthermore, within the solution our robust 'NPV Engine' uses a broad array of dynamic modeling factors which ensure the most accurate NPV forecasts."
Further, an Optimization approach can take into account regulations or investor covenants that constrain the optimization of workout options across the portfolio, as well as the investor's own time horizon. All of this information is used to calculate the real hold-to-maturity value of the entire portfolio. The investor can use that calculation to make an informed decision about whether to purchase the portfolio, and at what price, and can then direct the servicer to modify the loans accordingly.
Published articles outlining Response Analytics' approach can be seen by going to: www.responseanalytics.com/news.html.
About Response Analytics
Response Analytics, Inc. is a leading Financial Services Optimization (FSO) company that solves mission critical issues and evolving business challenges, using best-in-class modeling and optimization technology. Today they offer an unprecedented solution for the secondary market and distressed asset investors which uses optimization technology to improve the valuation accuracy and performance of distressed asset portfolios and therefore maximize returns from buy/sell transactions and portfolio servicing.
SOURCE: Response Analytics
Meir Kahtan Public Relations Meir Kahtan, 212-575-8188 mkahtan@rcn.com or Tim Manning, 480-429-4480, ext. 118 Tim.Manning@responseanalytics.com
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