The S-Curve

Welcome to The S-Curve

Now you will be able to receive the latest announcements, product updates, and our insights on the mortgage market in real time.

The name of the blog, the S-Curve, is a reflection of our logo and the central feature of our prepayment model. S-curves are seen in nature in many phenomenon, from population growth to prepayment and default models. Our first S-curve, in the early 1990s, used the arctangent function, then piece-wise linear functions, and evolved over time to be more complex and vary by FICO, loan size and LTV. This evolution encapsulates both the timeless nature of fundamental relationships and constant innovation to describe them better over time.

We hope you find the information useful and we look forward to your feedback.

Subscribe to our publications to make sure you stay up to date
Blog - Latest
  • Why Improving Access to Auto Loans Will Improve Job Stability and Diversity in the Workforce

    Connor Campbell


    For many people, having accessible transportation (a car, for example) is necessary. Most U.S. people live in areas without adequate public transportation and require vehicles to access jobs, healthcare, and groceries.

    Transportation barriers are among the many obstacles to achieving diversity and inclusion in the workforce. If people can’t get to work, people can’t get jobs. But the inaccessibility of auto loans is too often a barrier.

    The solution isn’t as simple as applying for a car loan. Taking out risky, high-interest loans without understanding the terms is a dangerous move for borrowers. The practice might technically improve access to auto loans in the short term, but the long-run picture is bleaker. Predatory lending leads to more auto loan defaults and more barriers to owning vehicles, especially in lower-income brackets.

    People work hard to make sure they can meet their financial commitments each month, and I believe there are many areas to improve accessibility when it comes to applying for an auto loan. Businesses that focus on helping borrowers with these areas will reap the benefits of workforce diversity while also doing good in their surrounding communities.

    Financial Barriers to Employment

    Life is unpredictable, and a stressed financial situation over a consistent period increases the risk of not being able to meet financial commitments. Unexpected costs pop up, resulting in borrowers being unable to meet their payments in already stressed situations. A chain reaction can then occur when a financial burden snowballs into losing a car, a job, or even a home. 

    Common barriers to employment include homelessness, substance use disorder, long-term welfare dependence, and lack of computer skills. Many companies also run background checks that include credit scores, even though it’s been proven that these models are biased against people who do not have generational wealth.

    Even worse, predatory lenders often target the financially disadvantaged. Some lenders are incentivized to give out risky loans with high interest based on imperfect information. These loans are then sold so the originator is no longer responsible for the risk of the loan they originated.

    This cycle ultimately leads to less diversity in the workforce. But we can overcome these barriers to employment if we start by resolving one thing at a time, starting with the transportation situation.

    3 Necessities to Apply for an Auto Loan

    A vehicle can get us back and forth to work, and it can also be a place to live in a pinch while getting things back together. But if someone lacks one of these key aspects of securing an auto loan, they’re likely to experience major barriers in the process:

    1. Steady Income

    Default rates on auto loans are closely correlated with unemployment. A steady income is becoming more ambiguous with the rise of the gig economy, but a good rule of thumb for borrowers is finding an average income received per month after taxes. If they don’t have a full-time job, they shouldn’t hesitate to take on gigs to earn income.

    2. Healthy Credit Score

    While some lenders may give borrowers an auto loan despite bad or no credit, a healthy credit score provides borrowers with the best rate. It’s important to remember that dealers are incentivized to give people loans, so borrowers will often feel pressure from salespeople. One way to alleviate that pressure is for borrowers to get preapproved with their bank first to get a better rate based on a clearer picture of their financial situations.

    3. Monthly Expenses

    It’s important for borrowers to budget and know where their money is going each month. This helps them understand what type of monthly payment they can afford. Personally, I break my spending down into two categories: essential (food, housing, utilities) and nonessential (streaming, cable, etc.). With an idea of how much they’re saving or spending, borrowers can make better financial decisions.

    Getting to Work

    No qualified job candidate should have to decline a job offer because they can’t afford to commute to work. But businesses can integrate transportation allowances into their hiring and onboarding processes for potential candidates.

    At Andrew Davidson & Co., Inc., we are actively researching how to incorporate alternative metrics that can be used to help paint a more accurate picture of a person’s financial history. Some of these include paying rent and cell phone bills consistently on time, which are not included in traditional credit scores. This information can be used by either employers or auto lenders to make better decisions.

Blog - Archives

The S-Curve Archives

  • Connor Campbell


    For many people, having accessible transportation (a car, for example) is necessary. Most U.S. people live in areas without adequate public transportation and require vehicles to access jobs, healthcare, and groceries.

  • Daniel Swanson


    As interest rates rise and fewer loans with refinancing incentive remain, other factors are primed to play a larger role in determining prepayment speeds in the coming months (and perhaps years). Turnover, the rate at which people move, is the most cited of these factors.  In this blog post, we’ll consider two other potential drivers: curtailments, or partial prepayments, and mortgage payoffs that don’t involve taking out a new loan.

  • Richard Cooperstein



    In 2021, Andrew Davidson & Co. Inc. (AD&Co) proposed a benchmark cohort approach to setting Ability-to-Repay (ATR) Qualified Mortgages (QM) standards. Successful benchmarks based on data are model-free and transparent, and the cohorts must perform consistently in comparison to one another and across time. Our original work used data through the early stages of the pandemic when non-performing loan percentages skyrocketed.

  • Richard Cooperstein


    How Lowering Capital Costs Affects Higher-Risk Loans

    Government-sponsored enterprises (or GSEs) are companies that provide guarantees and financing to originators through the mortgage secondary market. The size and resilience of the GSE secondary market maximizes diversification and liquidity which reduces financial risk and cost of capital. This benefit accrues to conforming borrowers through lower mortgage rates and resiliently available financing. 

  • Alex Levin


    The release of Andrew Davidson & Co., Inc.’s (AD&Co) new generation of financial engineering tools marks a shift to a new reality; when the traditional benchmark for MBS valuation, the LIBOR/ Swap yield curve, becomes unavailable. Our recent Product Release email informed our readers about the change. In short, our users can:

  • Richard Cooperstein


    FHFA held a listening session for interested parties on its proposed rule on the GSE process for credit scores.  The objective is making mortgage underwriting and pricing more accurate and more fair while balancing practical implementation by firms in the mortgage ecosystem.  Along with many others, I had the opportunity to provide insights on this proposed rulemaking.

  • Andrew Davidson


    In our January 19th blog entitled, A More Equitable Lending System Will Not Be Created by Accident, we described the efforts it will take to overcome not just bias in lending today, but the systemic factors that have limited access to credit in the past and have created an unjust system. 

  • Eknath Belbase


    In this short blog post I discuss some developments taking place in the flood insurance landscape in the US and look ahead at a few potential directions things could go. I suggest that universal catastrophic flood insurance coverage with a continuation of the introduction of risk-based pricing would be a significant improvement.

  • Richard Cooperstein



    The Government-Sponsored Enterprises (GSEs) entered conservatorship in September 2008. One could view the succeeding thirteen years as a journey back to financial stability with a refined operating model that looks more like a financial utility than a hedge fund. This business model is more compatible with a fair lending mission for a standard-setter that maintains secondary markets under an effective regulator. The GSEs remain the largest part of the housing finance backbone and a resilient funding source during economic stress.

  • Andrew Davidson


    Around 75% of white American families were homeowners in the first quarter of 2020, according to data from the United States Census Bureau. However, only 44% of Black American families owned their homes at the same time.