Yield Book mini-series on Socially Responsible Investing (SRI)
As part of our ESG Framework for Securitized products, Yield Book is pleased to introduce a three paper SRI mini-series covering our recent refinements and developments of our approach to ESG in MBS, including our latest paper on Early Pay Default Risk.
Early Pay Default Risk (EPDR)
The health of a lender’s production within a short timeframe since origination can reveal inclinations towards predatory lending practices. Yield Book’s Early Pay Default Risk metric helps identify lenders with seemingly problematic loan production and can also play a part in market health assessment processes.
Gauging lenders’ systematic deviation from expected rates serves as a proxy for the identification of predatory tendencies. The proposed Outsized Rates metric exposes high-rate lenders, for some of which we have found several examples of accusations regarding unlawful lending practices.
Part of the responsible servicing component of our quantitative ESG framework, the Loan Churn metric serves to identify loan servicers encouraging borrowers to refinance repeatedly in a short timeframe since loan origination with little benefit to the borrower, as incentivized by administrative fees.