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Fico Credits Added to Experian Capital Markets' System of MBSs
NYSE:FICO (FICO), the premier analytical and decision processing firm, today announces that Experian Capital Markets has added the most sophisticated FICO score to its proprietary Financial Markets Solutions (FICO®), extending its range of proprietary solutions to include Experian® Capital Markets' proprietary solutions. Vendors and buyers of mortgage-backed instruments use Experian's CreditHorizons for securities to overcome the limits of lending information in the analysis of lending risks in mortgage-backed instruments.
Supplementing the FICO score, which is labeled by Experian as an Experian/FICO exposure by Experian®, will give more insight to RMBS executives, vendors and institutional clients into the assessment of the credit quality of underlyings in nonagent credit pooling. It is used to enhance sell-side price strategy while at the same time assisting purchasers to make more confident investments choices and enhance riskmanagement.
FICO Score provides an additional forecasting strength level that allows the user to better estimate the exposure to delinquency and default of securitised mortgage debt. Buyers are benefiting from using new FICO ratings instead of those obtained at the time of lending, as recently announced changes in borrower behaviour are likely to alter their exposure to debtors.
"We are the leading supplier of loan score management software to the residential and commercial real estate industry," said Jordan Graham, FICO Senior VP of Scores. "Strengthening this role, we are pleased to be able to provide more complete end-to-end solution to meet the needs of the US residential real estate markets and the securitisation processes.
Experian Capital Markets and FICO provide a unique blend of financial and capital markets services that will enhance investors' trust and ensure a more efficient market".
The 2008 fiscal turmoil, however, revealed a gulf in the assessment of US sovereign debt, particularly in the mortgages sector. However, it has raised a number of issues about the predominant riskmanagement approaches. Most of the large banking and institutional groups continue to use proven loan meters.
A number of start-up creditors, however, are currently devising new approaches to assessing exposure to debtors. After all, the global economic downturn has had a tremendous effect on the accessibility of loans and on the way people manage their own financials. So for example, with less available loans and more aware of the risks of loans, we saw a younger generation tendency to stay away from credits.
In the absence of a loan histories, it is more difficult to estimate someone's exposure to loan risks. It is used to approve automotive finance and credits cards, while other debts, such as mortgage payments, are valued under the old system.