Mixing and Trading of Loan Pools

 

How to determine Risk, before Docs are drawn

HAVE YOU EVER WONDERED?  What it would be like, to originate a risk free loan? 

 

A lot of the past problems of the housing crisis had to do with loan origination.

 

What caused the housing crisis was:

1. The reliance on appraisals (or PV systems) to assess risk.  Combined with false assumptions.  Like prices will always go up. 
2. The total (TOTAL) lack of current Micro Market data information and trends.  

 

With current local market trends at different Micro Market levels, and Statistical Confidence numbers, you can apply a simple mathematical process to determine when to originate loans and when not to.

 

Below is a typical loan origination scenario.  With the 3 Properties.  The loan amount is the same at $200,000.  And all have the same FICO score, Macro Trends, Appraisal error, and Zero Fraud.  They are a Plain Vanilla Loan, owner occupied, and full doc.   Underwriting and QC has approved.  

 

• Which one do you approve?
• HAVE YOU EVER WONDERED? 
• What it would be like, to originate a risk free loan? 
• Would you like to know a way to lower your risk? 
• What would that look like?  Let’s take a look.

 

Loan Origination Table 1:

 

 

Which One has the Lowest Risk and Greatest Potential?

 

Loan Origination Table 2:

 

 

Choose Right: High Equity and Growth towards Financial Freedom.  Choose Wrong = High Risk.

 

 

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