Mortgage: Scoring That Goes Beyond A Person's Credit History

Mortgage scoring systems that do more than just measure a person's creditworthiness are fast becoming a banking industry requirement. And PMI Mortgage Insurance Co. (PMI) has carved out a significant portion of the market for such systems with its pmiAURA Score, which now scores about 20 percent of the first lien mortgages in the United States.

Its appeal continues to grow. Recently, two industry leaders agreed to use the pmiAURA Score system for loan purchase and pricing decisions. General Motors Corp.'s residential funding subsidiary, GMAC-RFC, a leader in the mortgage-backed securities and housing finance industries, will integrate its own automated underwriting system with DecisionWise, the Windows-based platform for pmiAURA. And First Union Capital Markets Group now is using pmiAURA in its loan purchase program.

Although pmiAURA incorporates personal creditworthiness in its overall score, it is just a portion of a score. Other factors in the scoring calculation include mortgage payment history, regional housing market statistics and other predictors of the future performance of a mortgage.

"It's predictiveness is more in line with a mortgage than just a person's credit history," says Dan Bettenberg, managing director of GMAC- RFC. He also says the pmiAURA system has broader data capacity than other scoring systems and is cheaper than the competing Freddie Mac and Fannie Mae systems, which charge a per loan fee. "When you license pmiAURA, you pay one upfront fee and annual maintenance fees, but no per loan fee," he explains.

The pmiAURA score uses a computerized statistical model that calculates information pulled from a database that draws on the experience of more than 1.5 million loans dating back to 1981. The score thus reflects the experience of economic cycles, including recent regional recessions. "We elected to use pmiAURA because we get product from many disparate sources, from relatively small mortgage bankers to large mortgage bankers who sell us large quantities of loans on a flow basis," says Trez Moore, managing director of whole loan trading at Charlotte-based First Union Capital. "We needed a tool that could provide uniform assessment of loan quality plus accommodate a great variety of different loan programs."

-peterson tfn.com