Insights into Predictive Foreclosure Analytics and Portfolio Management

Introduction

In today’s real estate landscape, staying ahead of foreclosure risks is of great importance for mortgage lenders and servicers. With the market witnessing an uptick in foreclosure activity, understanding a borrower’s propensity to default has become more crucial than ever. In this article, we’ll explore the workings of the Propensity to Default model by ATTOM and learn about its implications for mortgage servicers.

How the Propensity to Default Model Works

ATTOM’s Propensity to Default model utilizes advanced algorithms and comprehensive data sources to assess the likelihood of individual properties going into foreclosure within the next 12 months. Each property is assigned a propensity score ranging from 0 to 100, with higher scores indicating a higher risk of default. By categorizing properties into propensity groups, mortgage servicers can prioritize their portfolio management efforts effectively.

Understanding Foreclosure Trends

While foreclosure activity remains relatively stable, certain markets, such as Orlando, FL, and Cleveland, OH, are experiencing elevated foreclosure rates. With total foreclosures on the rise since 2021, mortgage servicers must gain deeper insights into borrowers’ ability to stay current on their mortgages.

Using ATTOM’s Propensity to Default Score

The Propensity to Default score empowers mortgage servicers to identify high-risk properties proactively. By leveraging predictive analytics and rich property data, servicers can prioritize their collection efforts and optimize portfolio management strategies.

Key Insights

  • The top decile of properties identified by the Propensity to Default score is nearly 6 times more likely to go into foreclosure compared to average properties.
  • Conversely, properties in the bottom deciles exhibit significantly lower foreclosure risks, offering potential cost-saving opportunities for servicers.

U.S. Foreclosure Activity in March 2024

Foreclosure activity in the United States remained relatively stable in March 2024, with 32,878 properties receiving foreclosure filings. While this represents a slight decrease from the previous month, certain states, such as Illinois and Connecticut, continue to grapple with elevated foreclosure rates. Despite the overall stability, mortgage servicers must remain vigilant in monitoring foreclosure trends and adapting their strategies accordingly.

Implications for Portfolio Management

Mortgage servicers can employ data-driven strategies to mitigate foreclosure risks effectively. By focusing on high-propensity properties and optimizing resource allocation, servicers can enhance portfolio performance and minimize financial losses.

Conclusion

In an evolving real estate landscape, leveraging predictive analytics is key to navigating foreclosure risks successfully. With ATTOM’s Propensity to Default model, mortgage servicers gain valuable insights into property-specific foreclosure risks, enabling proactive portfolio management strategies. As a leading resource for nationwide property data, Brazoban Realty Group is committed to supporting mortgage servicers with comprehensive real estate data solutions.

Sources:

ATTOM Team for ATTOM | Real Estate News, Sarah Marx for Housingwire