Improving lending practices helps consumers, economy

Researchers use SAS to forecast effects of lending practices

The not-for-profit Center for Responsible Lending plays a key role in researching the impact of lending practices on consumers. Its research on payday and subprime lending has helped regulators understand how these practices affect both consumers and the economy, including a 2006 prediction that the subprime mortgage market was headed for a meltdown. SAS is the analytics engine that supports the Center's research.

Our goal is to help level the playing field so that scrupulous lenders can stand out and win on merit. SAS helps us do that.

Keith Ernst
Director of Research

Challenges

The Center routinely conducts research that combs through 30 million to 50 million Home Mortgage Disclosure Act records to spot patterns and trends. Before using SAS, it took hours to run a program. Research that required multiple calculations often took days to process. One mistake would set a researcher back a full day. Because the Center was involved in a state-by-state review of the impact of lending laws, it needed a better statistical solution.

Results with SAS®

  • Calculations that took hours now take minutes. SAS allows the Center to create "what if" scenarios that help it do a better job of understanding how regulations might affect the mortgage marketplace.
  • By looking at the performance of subprime loans across local markets, the Center predicted the subprime mortgage meltdown two years before it happened. Its analysis showed that one in five subprime mortgages in real estate hot spots like Southern California and Las Vegas was likely to default before the market bubble burst.
  • The Center was able to expose the flaw in the argument that prepayment penalties benefit consumers because those loans have a lower interest rate. By analyzing data available at the national level and using regression models, the Center discovered that the mortgage rate "break" was diverted, most likely to third parties like mortgage brokers. New regulations greatly restrict prepayment penalties.
  • The Center was able to show that state laws enacted to prevent predatory mortgage lending work as intended to reduce abusive loan terms without impeding credit flow. It also analyzed payday lending in California and discovered that such lenders are nearly eight times as concentrated in neighborhoods with the largest share of African-Americans and Latinos.
  • Using SAS, the Center has automated the updating of statistics on mortgage conditions. This makes the organization a go-to resource for policymakers, researchers and journalists seeking information about the state of the housing market.

Making a name for itself

The quality of its research has earned the Center a major role in testifying before Congress and the Federal Reserve. "Our input during the policymaking processes will help shape financial regulation going forward,'' says Keith Ernst, Director of Research for the Center.

Challenge

Produce fast, accurate forecasts about the impact lending laws have on consumers across the 50 US states

Solution

SAS® Forecasting

Benefits

  • Reduces program run time from 12 hours to minutes.
  • Fosters complex analysis that led regulators to restrict prepayment penalties on mortgages and other predatory lending practices.

Bu makalede gösterilen sonuçlar, burada açıklanan belirli durumlara, iş modellerine, veri girdilerine ve hesaplama ortamlarına özeldir. Ticari ve teknik değişkenlere bağlı olarak, her bir SAS müşterisinin deneyimi kendine özgüdür ve hiçbir açıklama tipik olarak düşünülmemelidir. Gerçekleşen tasarruflar, sonuçlar ve performans özellikleri, bireysel müşteri konfigürasyonlarına ve koşullara göre değişiklik gösterecektir. SAS, her müşterinin benzer sonuçlara ulaşacağını garanti etmemekte veya bu konuda bir taahhütte bulunmamaktadır. SAS ürün ve hizmetlerine yönelik tek garanti, söz konusu ürün ve hizmetlere dair yazılı anlaşmada belirtilen açık garanti beyanlarında ifade edilen garantilerdir. Bu belgedeki hiçbir ifade, ek bir garanti teşkil ettiği yönünde yorumlanmayacaktır. Müşteriler, üzerinde anlaşılmış bir sözleşmeden doğan bir alış verişin bir parçası olarak ya da SAS yazılımının başarılı bir şekilde uygulanmasının ardından sunulan proje başarı özetinde, başarılarını SAS ile paylaşmışlardır. Marka ve ürün adları, söz konusu şirketlerin ticari markalarıdır.

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