Firm Helps Home Lenders Find Solid Risks

Intellidyn Corp. is working with some major lenders to help them identify borrowers who are seeking to refinance mortgages from lenders that have gone out of business. Many of these borrowers have adjustable rate mortgages facing much higher payments – payments that could cause the borrowers to default, according to Intellidyn President and CEO Peter Harvey.

Hingham, Mass.-based Intellidyn provides data management, analytic services, list services, database marketing and strategic services to the financial services industry. Intellidyn says there are more than 182,000 mortgages that are with lenders that have failed. It counts 12 lending clients that are seeking these borrowers. 

“Years of business intelligence data show that typically 50 to 60 percent of refinance borrowers return to their prior lender for refinancing. But now more than 130 of those lenders have ‘imploded’ and disappeared from the landscape,” Harvey said. Many of these borrowers can’t afford the new payments of the adjustable loans but are still good risks for a fixed-rate, interest only or other style mortgages, he said.

“Some of the [imploded] lenders were very new in the business and they put people who could have qualified for prime, fixed-rate loans into subprime-adjustable loans,” said Harvey.

Many of these borrowers are still good risks with properties in areas where homes are holding their values, said Harvey. An interest-only loan could be a good option for some borrowers while others may qualify for FHA loans or fixed rate loans with more amenable payment options than the readjusting ARM.

Intellidyn identifies such borrowers by using a combination of property, deed and credit data, Harvey said. “Some of these borrowers aren’t too far under water yet. You’d be amazed how many people don’t even realize they have these mortgages (due to reset to higher payments).”

Many of the adjustable rate mortgages were written using very low teaser rates that are readjusting to market rates after two years — resulting in new payments that are hundreds of dollars more a month than the previous payments. But the borrowers’ incomes haven’t gone up that much, or at all, Harvey said.