AD&Co. Update

Prepayment Model License Structure
by Rob Landauer

Effective immediately, there are now three levels of prepayment model licenses available from AD&Co. With this format, we hope to provide the models that our clients need through a license structure that is cost effective and easy to administer.

Please keep in mind that our license fees are for a site license for use through a designated system and include all service and support, upgrades, and access to either the Excel or web based version of the licensed model. Licensed models can be utilized through a second system for a small incremental annual license fee. For more information on the loan types covered by each of these models, please refer to our website at www.ad-co.com and click on the Vectors tab. For specific license fees, please do not hesitate to contact Rob or Ilda.

1) Level One - Provides access to the MBS Prepayment Model without consideration of the extended disclosure data items (weighted average loan size, LTV, FICO, geography, loan purpose, etc). This level of service does not incorporate adjustments to the forecast made by the risk multipliers that “tune” the turnover and refi tuning parameters. V5.1 of AD&Co’s MBS Prepayment Model can generate prepayment forecasts either with or without the extended disclosure data. V5.1, when used without the risk multipliers, can be called by most of our vendor systems that have integrated v5.0 of the MBS Prepayment Model.

2) Level Two - Provides access to v5.1 of the MBS Prepayment Model including the consideration of the extended disclosure data items and resulting adjustments to the risk multipliers. Currently, this level of service is available through Polypaths and Derivative Solutions and through all internal systems. All of our vendor partners are working to integrate the risk multiplier capability.

3) Level Three - Provides access to Level One and/or Level Two (above), and AD&Co’s suite of ABS Prepayment Models including our newly released Home Equity (sub-prime) fixed and hybrid models. The ABS suite can be licensed alone as well and is comparable to the Level One license.

AD&Co’s OAS Spreadsheet product that provides access to our market standard OAS-based valuation system through Excel can be added to any of the license levels for a highly cost effective incremental license fee.

In next month’s (October) Pipeline, we will be officially announcing the release of v5.1c which will replace v5.1b of our MBS Prepayment Model. This new version incorporates two new factors and has shown far superior predictive performance than any of our previous versions. Please be sure to read this column next month to learn all you need to know about our newest release.

As always, please let us know what questions, concerns and ideas you have about our products and services. Your input is invaluable.