Lender Processing Services Creates Home Price Index

The applied analytics division of Lender Processing Services has formed its own home price index to help mortgage professionals estimate property values by looking at various trends taking place for properties throughout the country.

Using the LPS database and sources, the HPI will comprise more than 13,000 ZIP codes nationwide. For every ZIP code, the HPI will provide five tiers to show varying price ranges and patterns of change for different homes in the area from low-class, middle-market and high-end properties.

REO discounts down to the ZIP code level are also provided in the LPS HPI and used to correct for distortions that otherwise occur when REO sales are included in HPI calculations.

The Jacksonville, Fla.-based provider of mortgage data and technology said both of these features make the HPI “a reliable tool for estimating borrower stress, negative equity and potential for default and loss.”

Two repositories called Sitex Real Estate and McDash Loan Data provide approximately 75% of the data for properties throughout the country. Almost 98% of these properties are indexed at the ZIP-code level.

Because both repositories are owned and maintained by LPS, the company can facilitates more efficient processing and show market trends at least two months before other competing indices. LPS said it plans on updating its HPI monthly to avoid gaps in historical data.

“With multiple economic issues pressuring local home prices, it’s more important than ever that mortgage industry professionals have an accurate understanding of the property values collateralizing loans in their portfolios,” said Dan Berman, president of LPS Applied Analytics. “It’s not feasible to order updated appraisals or even automated valuation model reports for every property represented in a portfolio, but the LPS Home Price Index is a cost-effective means of estimating current property value, risk of loss and borrower stress.”