Mortgage Lenders Embracing 'Predictive Analytics'?

Mortgage lenders are now following in the footsteps of credit card and auto lending operations by incorporating predictive analytics to better manage risk, according to James Caldwell, a partner with Deloitte & Touche LLP, at the MBA's National Mortgage Servicing Conference & Expo in Phoenix."There are several stages of increasing sophistication in collections, ranging from traditional to enhanced and then to risk-based," Mr. Caldwell told conference attendees during his session, "Leveraging Predictive Analytics to Drive Profit in Mortgage Collections." Deloitte & Touche conducted an online survey with the assistance of the Mortgage Bankers Association in which it conducted in-depth interviews with senior executives. With rising rates, concerns over housing prices, and a strained economic outlook, the survey found that lenders are implementing a variety of techniques to lower costs and boost revenues. "Mortgage lending has always looked for trends in customer data," Mr. Caldwell said. "However, sophisticated analytic tools can recognize critical patterns beyond trends. The market for decision analytics software in the U.S. was $2.3 billion in 2004 and is expected to grow by 30% in the next two years."