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Tool Helps Predict Bankruptcy

Bankruptcy Navigator Index enhanced

Nov. 4, 2013

By Mortgage Daily staff

The latest iteration of a risk score product promises to helps mortgage lenders better identify prospective borrowers who are likely to file bankruptcy.

After peaking at nearly 1.5 million filings in 2010, U.S. non-commercial bankruptcy filings have since fallen back to 2008 levels.

Data from the American Bankruptcy Institute indicate that U.S. consumers have made 767,445 non-commercial filings this year through Sept. 30.

Mortgage lenders are listed as debtors on some of those bankruptcy cases, and some lenders could see principal loan balances cut.

Equifax hopes to help some of the lenders in the latter category.

The Atlanta-based data service provider said that the launch of Bankruptcy Navigator Index 4.0, its "most predictive bankruptcy risk score to date," will improve lenders' ability to forecast potential consumer bankruptcy.

The latest version improves risk prediction by up to 10 percent, according to Equifax.

Advanced decisioning attributes reportedly provide more consistent decisions.

Equifax noted that score stability has been increased through the use of random samples that were pulled from its credit database.

"BNI 4.0 will give lenders the ability to predict and avoid potential consumer bankruptcies with improved performance and more consistent decisioning," Equifax. Senior Vice President of Product Innovation and Management John Cullerton said in the announcement. "The benefits of this new product translate to overall more confident risk decisions for Equifax customers."

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