Prepayments on contractual loans and paydowns from indeterminate maturity loans (e.g. LOC, credit cards) are not generally available except for generic mortgage and auto products. This constrains ALM modeling of performance and IRR, and may lead to unforeseen performance exposures. Reports produced in the MPS Loan Prepayments Services move your ALM modeling of loan prepayments and paydowns to a new dimension of precision by providing institution specific analysis of category level loan behaviors across multiple rate scenarios and between categories.
With this MPS service, your institution is empowered to:
- Precisely measure prepayments from contractual loans in specified rate scenarios.
- Precisely measure paydowns from indeterminate maturity loans in specified rate scenarios.
- Anticipate "domino effects" of one prepayment affecting other loan balances.
- Better analyze IRR and business plan performance.
MPS Loan Prepayments Analysis Report
This report empowers managers who want to obtain precise forecasts of prepayments and paydowns. These are quantified in a simultaneous system of statistical equations that produce accurate behavior estimates by category across rate scenarios and among categories. Standard deliverables include an easy to use executive summary, detailed forecast data tables, ALM model ready prepayment and paydowns, and complete documentation.
An optional deliverable drills down into the loan level behaviors underlying category behaviors. This segments loans by borrower characteristic (e.g. age, tenure with institution) or loan attribute (e.g. teaser rate-linked debit card) to determine which loans are more favorable based on defined attributes (slower prepayments, longer average life, etc.).
MPS loan prepayment analysis reports are produced using the MPS Advanced Assessment Methodology. This patented, advanced econometric-based approach analyzes specific loan rates and historic balances data in a simultaneous system that reflects all behavior influences. Direct audit links underlie all estimated prepayments and paydowns to add confidence.