Data Commoditization in the Securitization Markets

Abstract

Data is the lifeblood of the securitization industry, and the lack of ready access to it and proper tools to analyze it was considered to be a primary flaw in the recent credit crisis. This article goes over the current state of affairs in the data side of the securitization markets, particularly residential mortgage backed securities, and details some of the pricing pressures that exist as the space becomes more competitive. It describes the bare minimum set of components that a good securitization information platform should contain, including individual property, borrower, loan, and payment-history data along with predictive and waterfall models. The article mentions many of the players in different aspects of the market and current efforts being made to restore confidence in the structured finance industry. It hypothesizes about the future of the data landscape for this area of the financial markets and how these developments should greatly benefit investors in the future.

TOPICS: Statistical methods, MBS and residential mortgage loans