Welcome to The S-Curve
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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.
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The Power of MentoringThoughtsJanuary is National Mentoring Month which is very appropriate since it coincides with the time when we typically set out our goals and intentions for the New Year. Organizations are embracing mentoring programs and these programs have indeed become a strategic imperative for many. There are many benefits to mentorship and it's easy enough to comprehend. The individuals involved in a mentoring relationship and the organizations that choose to sponsor a mentoring program all are likely to benefit.
For the organization, mentoring can build and strengthen the talent pipeline; help build loyalty among emerging talent; set up or help identify the next generation of talent; and build strategic alignment across silos of an organization by informally encouraging knowledge sharing across different areas. Mentoring programs have proven to be an effective tool to retain and effectively onboard talent, decrease the learning curve for critical roles, build a leadership pipeline, increase employee engagement and build networking and sponsorship. Additionally, mentorship is more frequently being used as a thoughtful tool to promote diversity, equity and inclusion by ensuring that all talent within an organization is provided with opportunities to learn from what the organization may consider to be the 'best and brightest' or simply by those who 'have been there and done that' before. Mentorship promotes diversity of thought and experience to be shared, which we are universally understanding, and recognizing is a benefit to any organization.
For the individuals in a mentorship relationship whether or not they are a part of a formal program, there is unlimited opportunity for learning, growth and development. A mentee has the benefit of getting perspective from someone who can be encouraging but also provide critical and frank feedback when needed and be instrumental in helping a mentee to increase their resiliency in the face of challenges. Mentors can help a mentee to navigate specific situations or people as well as provide sage advice on navigating a career. Solid mentorships can flourish and last for months or years.
Mentorship programs help to connect or match individuals and provide a framework that encourages confidential dialogue on a regular and consistent basis. For organizations -launching, executing and coordinating a mentorship program may seem like a daunting task but it does not need to be. Mentorship comes in all shapes and sizes - the key is to get started. Any company or association should consider providing tools and encouragement for mentorship opportunities both inside and outside of its organization as a simple way to demonstrate that they wish to invest and focus on talent. Talented employees are often looking for opportunities for personal and professional growth just as much as they are seeking promotions and compensation increases. It is important that team members believe they have access to impactful development opportunities to hone their skills and grow into their full potential. Mentorship programs demonstrate a commitment to the employee to develop in the manner they want with goals they establish.
If there is an existing program at your organization, see how you can get involved. If there is no formal mentoring program at your organization then consider helping to build one. In any case, no matter where you are in your personal or professional journey, look for a mentor. And for those of us who are senior leaders look for one or more mentees. I took much pride and enjoyment in starting up a mentorship program at my former company which had hundreds of employees from around the world participate through several "waves" of the program. In addition to opportunities within your company - there are many organizations that seek mentees to volunteer their time. American Corporate Partners (ACP) is a great one that I have had the pleasure of being a part of which helps our veterans, and their spouses prepare for professional opportunities outside of the military. GROW MENTORING is another that I have been a part of which began during COVID-19 by a young lawyer in the UK who simply wished to encourage junior lawyers and law students to connect with more experienced professionals during an otherwise isolated time. University alumni associations, professional organizations such as TechGC and many other groups have mentorship opportunities to get involved in and are always looking for volunteers.
And keep in mind that in a mentoring relationship it's not only the mentee that benefits! Mentorship builds a two-way, mutually beneficial relationship. What mentors learn and take away from mentoring their junior mentees is often priceless and may be the biggest surprise in any mentorship relationship. A good mentor should be an active and open listener. As an active listener a mentor can learn new insights, new values, and tools from their mentee including strengthening their coaching and feedback skills and make important often long-lasting relationships.
Ask most leaders if they have had one or more mentors during their career journey and the answer will undoubtedly be a resounding 'yes'. At a low cost with opportunity for high impact, it is no surprise that mentorship programs are becoming more and more popular, and more and more employees are getting involved. As you set your goals for 2023, I encourage you to seek out opportunities to be a mentor or mentee for yourself and for others.
Happy National Mentoring Month!
The S-Curve Archives
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ProductsAndrew Davidson & Co., Inc (AD&Co) is pleased to announce the beta release of a new monthly report series titled “Specified Pool Prepayment Trends,” which aims at showing market prepayment trends for specified agency pools in support of pay-up analyses by investors, traders, and alike.
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ProductsAndrew Davidson & Co., Inc (AD&Co) is pleased to announce that Polypaths LLC supports AD&Co’s Auto LoanDynamics Model (Auto LDM) providing prepayments, defaults and losses on auto loans and securities.
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EventsThe Structured Finance Association hosted SFVegas 2023 (February 26 - March 1), a broad capital markets conference with thousands of attendees in Las Vegas. Andrew Davidson & Co. Inc. (AD&Co) was a sponsor focused on the mortgage sector. As we engaged with clients and policy leaders, a few themes emerged: Data, Expanding Access Safely, Ginnie Mae Servicing and Auto Loan Performance.
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ProductsAndrew Davidson & Co., Inc (AD&Co) is pleased to announce the official release of the LoanDynamics Module in Kinetics, AD&Co's new modular platform for running AD&Co analytics via a desktop application, web browser, or REST API. The LoanDynamics Module is the latest way to run the LoanDynamics Model, allowing users to perform sensitivity analysis, validation testing, and scenario analysis in a modern, user-friendly application.
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ThoughtsRecently the Federal Housing Finance Agency (FHFA) announced some upcoming changes related to the use of new credit scores, FICO 10T and VantageScore 4.0 by Fannie Mae and Freddie Mac. “FHFA expects that implementation of FICO 10T and VantageScore 4.0 will be a multiyear effort. Once implemented, lenders will be required to deliver both FICO 10T and VantageScore 4.0 credit scores with each loan sold to the Enterprises”.[1] This announcement will impact the entire mortgage ecosystem.
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ThoughtsJanuary is National Mentoring Month which is very appropriate since it coincides with the time when we typically set out our goals and intentions for the New Year. Organizations are embracing mentoring programs and these programs have indeed become a strategic imperative for many. There are many benefits to mentorship and it's easy enough to comprehend. The individuals involved in a mentoring relationship and the organizations that choose to sponsor a mentoring program all are likely to benefit.
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ThoughtsHomeownership is the largest source of wealth accumulation and inter-generational wealth transfer for the working and middle class. However, the history of racial discrimination (it was actually legal to discriminate by race in housing until the Fair Housing Act of 1968), suggests that we have a continuing responsibility to ensure fair access to housing and housing finance.
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ThoughtsDear Friends,
As Andrew Davidson & Co., Inc. (AD&Co) reaches its 30-year milestone, I reflect on two seemingly contradictory ideas: Firms need experience to guide clients through difficult times but sometimes it is necessary to discard past practices to achieve breakthroughs.
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ThoughtsFor 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.
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Thoughts
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.