Partnership Aims to Help Lenders Weigh Short-Term Prepayment Risk.

Lenders and analytic companies have developed a vast body of data about prepayment rates over the years, but the sustained drop in interest rates that shaped the lending environment over the past three years challenged even the best prepayment predictors.

Specifically, few anticipated how fast many new loans would prepay. Some were gone from the books within a few months of being boarded on the system. Now, two firms are teaming up to offer lenders a new tool for judging short-term prepayment propensity.

Applied Financial Technology here has entered into an agreement with McDash Analytics to provide the nation's leading lenders and mortgage financing companies with short-term prepayment projections as well as housing turnover and refinancing scores.

The strategic partnership combines the scoring expertise of AFT with the large database of performance information involving nearly 20 million mortgages, or about one-half of the mortgage market, that is owned by McDash Analytics.

The companies say that the partnership will give lenders tools to help them enhance the accuracy of prepayment projections and allow greater insight into mortgage values and future behavior.

The data from McDash do not include borrower-specific information, and users can only identify their own loans. The rest are anonymous as far as individual lenders are concerned.

Graham Williams, chief operating officer at AFT, says the technology gives users more "granularity" to distinguish prepayment behavior among similar loans.