Modernizing mortgage markets
The challenge:
In a fragmented sector which lacks granular, timely data, market participants can be challenged to quantify mortgage-related risk and enhance their investment processes.
The goal:
ICE is combining its data, technology, and expertise to provide greater insight and efficiency across the entire life of a loan.
Let’s take a closer look at data across the life of a residential mortgage.
Real estate:
New insight into the loan environment
Before a mortgage is even originated, stakeholders can analyze data around existing listings to better understand home price trends and market conditions.
Real estate:
Tracking dynamic home price trends
ICE’s data can track metrics around active listings, average days on market, market health, and indicate whether a property is selling above or below its asking price. ICE’s Home Price Index tracks home price trends, covering over 22,000 ZIP codes for an accurate, timely view of the market.
Origination:
Granular data for a timely picture of credit quality
Once a mortgage is created between a lender and borrower, it generates several data points. ICE collects data around metrics such as the average time to close, changes in interest rates, borrower demographics and credit quality. Mortgage traders, lenders, investors and portfolio managers can use this data for economic forecasting, prepayment models, and more precise risk management. ICE’s Rate Lock Indices track mortgage rates calculated from actual loan applications to provide a more comprehensive reflection of residential mortgage interest rates. The indices can be used to gain an understanding of credit quality using several criteria - including loan purpose, term, type, status, LTV and FICO score. ICE's data also tracks secondary market pricing and execution.
Mortgage servicing:
Loan-level data to fine tune risk management
Mortgage servicing occurs after the loan closes and funding is completed. This is the process of collecting monthly loan payments and managing the borrower’s annual taxes and insurance premiums using their escrow accounts.
ICE's data is applied at the loan level to assess factors like individual borrower risk (prepayment and default), steps for loss mitigation and avoiding foreclosure. This data gives users the ability to sort loans by credit profile and keep as many current in their portfolios as possible. Users can also benchmark residential loan performance, and track prepayment and delinquency trends.
Mortgages in capital markets:
Enhanced pricing and prepayment modeling
Mortgages from banks or government sponsored enterprises like Fannie Mae and Freddie Mac are bundled and sold to investors. Around three in five U.S. mortgages are repackaged in this way as mortgage-backed securities (MBS). ICE provides coverage for agency data back to 1994 and can process the whole universe of ~1 million MBS pools in minutes. New products and indicators are also being created by linking distinct datasets - for example, a prediction dataset designed to significantly enhance mortgage prepayment forecasting. ICE's existing Prepayment and Credit Model is widely adopted by MBS investors with coverage for all segments.
Climate risk:
Pricing climate risk into bond markets
A rise in the frequency and severity of climate events has implications for property insurance costs, municipal bond portfolios and MBS pricing. To help investors identify and measure these impacts, ICE provides a range of physical risk data. In addition, the combination of our geospatial intelligence platform with mortgage data helps users to identify and understand the impacts of climate risk on their loans, properties and portfolios.