Overture Takes Second Look at Credit Risk.(Conference notes)

Boston -- As the mortgage industry looks to restore investor confidence as well as its own tarnished image, Overture Technologies suggests that a concept called re-decisioning may be the answer.

Today securitization is done with macros and spread sheets, said Linda Simmons, senior vice president of business development for Overture at the MBA National Secondary Market Conference here. In order for the industry to reignite the investor has to know what the security is worth. It has to be obvious.

Overture contends that the industry can return to profitability by extending the role of automated decisioning beyond underwriting. More specifically, Overture recognizes the opportunity to leverage product and pricing eligibility as well as rules-managed decisioning in post closing, capital markets, loan modifications and many aspects of loan servicing to improve loss mitigation. With this added transparency and consistency provided through automated decisioning, investors can improve upon best execution as well as pooling and securitization efforts.

The notion of re-decisioning is such that you have original data from the loan already. So, if you augment that data with new data you can have a better assessment of the collateral, noted Ms. Simmons. Were not seeing a lot of re-underwriting going on today. I think it would help. Lenders should take more characteristics of the borrower like payment history, requests to extend credit, requests to refi and use that data to better evaluate that loan.

Another such piece of data needed would be an updated credit score. ...