Adjustable Rate Mortgage Data - ARM Data

Over 10 million Adjustable Rate Mortgage (ARM) loans were originated in the last 5-6 years (majority in 2004 – 2006). Most of these loans will “re-set” to a higher interest rate between October 2007 and August 2008. Each time a loan interest rate “re-sets” a consumers monthly financial obligations increase. Many consumers feel “payment shock” as they did not understand the full impact of the rate re-set. Some consumers do not have an opportunity for refinance due to high pre-payment penalties. Others do not qualify for refinance due to deflated housing prices affecting their loan to value ratio. Contrary to popular belief, about half of ARM loans are held by Prime and Super Prime consumers.

Opportunities for use of ARM Data

Understand the Impact and Opportunities

Evaluate acquisition opportunities
Limit exposure when prospecting for new accounts
Assess potential impact to their existing portfolios
Understand impact of different types of ARM loans
Provide Loss Forecasting for management and regulators

Use of this data is not restricted to mortgage portfolio assessment or opportunity identification. ARM data can help provide insight in EVERY lending category.

Mortgage (refinance)
Card
Home Equity
Personal Loans
Automotive

What Does
Experian Have?
Data
Elements
Uses and
Examples
Data Element
Definitions

Our partner manually gathered ARM Rider information nationally from the county records
Includes loans already re-set and those yet to re-set
Includes borrowers and co-borrowers

Prescreen, Reports and Evaluation

Interest Rate
Recording Date
Mortgage Amount
Rate Change Date
Rate Change Frequency
Rate Change Interval
Rate Calculation Change
Rate Change Max %
Rate Change % Limit
Rate Pay Option Flag
Interest Only Flag
Negative Amortization Flag
Prepayment Rider Indicator
Prepayment Date of Expiration
Rate First Interest Change Cap
Rate Change Date
Combined LTV
Calculated Subsequent Change Date

Account Review

Interest Rate
Recording Date
Mortgage Amount
Rate Change Date
Rate Change Frequency
Interest Only Flag
Negative Amortization Flag
Combined LTV
Calculated Subsequent Change Date

Uses	Examples
Prescreen and Cross-sell Experian can append ARM data elements to a prescreen list for segmentation purposes Experian can select a list of names out of the ARM data file to then Prescreen Experian can exclude consumers from a Prescreen list ARM data must not be used on the back-end for credit eligibility	Segmentation Append all ARM loans expiring in the next 3-6 months – make those consumers a different offer than the offer made to the rest of the population Selection Select all consumers with an Interest Only loan to Prescreen for a refinance offer Selects all consumers with ARM loans already re-set to Prescreen for a card offer Exclusion Exclude all consumers with an ARM re-setting in the next 1-12 months from Prescreen campaigns
Account Review Utilize the ARM data for determination of the frequency to monitor consumers for Account Review Use the data for loss forecasting Cannot be used for eligibility purposes Cannot be used for any adverse action decision	Determining how FREQUENTLY to monitor a portfolio Experian appends indicator of Interest Only and Negative Amortization loans to a Quest program Monitor those consumers through Notification Services Daily Triggers^SM to assess risk parameters more frequently
Reports Experian can process your portfolio of accounts against the ARM data file to generate reports of the frequency of data elements at a zip code level Use the reports to assess exposure	Exposure assessment Send Experian a subset of a portfolio – ANY portfolio (i.e. Card, Mortgage, Home Equity, Auto, Deposits, Personal Loans, etc) Experian processes portfolio against ARM file Experian returns reports at a Zip Code level of frequency of occurrence for various ARM elements Assess your portfolio’s exposure to determine if you need to purchase ARM file on Account Review programs
Evaluation Experian can receive a subset of you customer file, append ARM data elements and return to client Experian can send data on up to 10,000 random consumers with ARM data elements present	Impact on portfolio Sends Experian a SUBSET of your portfolio Experian appends ARM elements to the file, strips identification information and returns to you Assess impact of already re-set ARM loans on portfolio performance to determine remaining potential impact and possible “triggers” of risk