Strand Research Sells Exclusive Rights to Collateral Risk Modeling Tool.

Strand Research here is auctioning an exclusive license for its residential real estate index, a model that can be used to identify foreclosure risk one to five years in the future.

Bidders were asked to submit bids to the New York law firm of Morgan Lewis & Bockius by the end of June. Robert Rothstein of Strand Research said he plans to spend about a month reviewing the offers before selecting a buyer.

Mr. Rothstein said that the modeling in the Strand Index graph line accurately can identify a lender's heightened risk of loss from foreclosure up to five years ahead of the actual event. The index can be used to monitor regional housing markets, or sub-markets within regions.

Mr. Rothstein said the model is based on quantifying shifts in supply and demand within housing markets, identifying peaks in the housing markets to see where future loan problems might crop up.

"You can identify long- and short-term cycles using this technology that you can't identify as quickly using any other technology in the field," Mr. Rothstein said.

"Each regional market has its own unique cycles. Chicago's are not the same as Houston's or Denver's," he added.

Mr. Rothstein said he developed the idea for the index many years ago while he was working as a litigation appraiser.