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.
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AD&Conversations: Trends in the Home Equity SectorPodcastJoin Rob Landauer in a conversation with Abe Martin as they discuss his recent Pipeline article, "Modeling the Balance Behavior of HELOC Borrowers." In this episode, they highlight key points from the article as he shares insights into the draw component of HELOCs and provide an update on the beta release of our much-anticipated industry HELOC model.
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Industry Leaders in Fixed-Income Analytics, Kelli Sayres and Gene Park, join Andrew Davidson & Co., Inc.News
We’re excited to announce a major addition to the Andrew Davidson & Co., Inc. (AD&Co) team. Industry leaders Kelli Sayres and Gene Park, known for building and scaling leading fixed-income analytics platforms, have joined AD&Co’s Business Development team. With decades of experience, deep client partnerships, and a shared commitment to rigorous quantitative analytics, their arrival marks an exciting new chapter for our firm and the clients we serve.
Read the full press release to learn more about their backgrounds, recent work at Numerix, formerly known as PolyPaths and what this means for AD&Co.
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White Paper: Evaluating GSE Servicing Rights With Extended Consumer Credit Data: Valuation and Sensitivity AnalysisThoughtsBuilding on our earlier research on expanded consumer attributes, AD&Co continues to explore how credit data contributes to modeling delinquency and prepayment risk, which are key drivers of mortgage servicing rights cash flows and valuation.
Our latest analysis shows that while modern credit scores capture important borrower behavior, there is still meaningful explanatory power beyond any single score. Across 2,000+ consumer attributes, additional variables provide incremental insight into loan performance and mortgage servicing rights valuation dynamics.
Read Now
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Andrew Davidson Featured on the One On One with Greg SherEventsAndrew Davidson recently joined NFM Lending’s Greg Sher on the One On One podcast to discuss our recent white paper, “The Impact of Moving Away From the Tri-Merge Standard.”
In the conversation, Andrew shares insights on the evolving credit score landscape and what these changes could mean for mortgage modeling and risk assessment.
You can listen to the full discussion here:
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Impressions from SFVegas and OB Summit 2026EventsAD&Co recently sponsored and attended SFVegas 2026 and Optimal Blue Summit 2026. This post shares the AD&Co team's unique perspectives and key takeaways from attending both conferences.
The New Non-Agency Model, Real Estate Exposure to Climate-Related Hazards & Escrow Analysis (Eknath Belbase)
Daniel and I recorded a Exchange Live: Tech Odyssey podcast on Kinetics and the upcoming release of LDM v4.0. The 30-minute audio and accompanying slides are available on demand. We focused on DSCR/prepay penalty, along with the addition of climate.
My panel on climate risk and property values went well – this year the focus shifted a bit to resilience, and the opportunity to reduce the rate of insurance increases by putting money up front into strengthening homes. Several states are funding the initial outlay required in pilot programs as part of insurance affordability initiatives (including Deep South states). David Zhang of MSCI started off the discussion with a tally of damages from physical risk sorted into quintiles of cost (measured against home value). The top quintile is already at a mean of 55bps per year of loss (these are only losses from weather events of scale and insurance needs to include costs such as fires starting from appliances or flooding from sewer back-ups).
Finally, we learned that Cotality has a database of property tax histories on all U.S. single-family homes and is working on an approach to forecast taxes going forward, so our vision of a full escrow-conditioned HPA and LDM is within reach.
Contact us for more information on LDM v4.0.
Key Takeaways (Daniel Swanson)
It was great to see so many familiar faces and to see the conference booming (though also a bit foreboding – the last time it was so packed, there was a crisis shortly thereafter). Here are a few key takeaways I had from talking to different people.
Non-QM
- There is a lot of interest in non-QM from many sophisticated participants
- Analyzing new loans is complicated and most people are not taking advantage of all the information in the deals
Climate
- State-level behavior is changing, particularly FL payups, perhaps due to taxes and insurance (that link is hard to prove)
- Servicers are starting to care about T+I for several different reasons (escrow float=positive, delinquency risk=negative)
Credit Scores
- Participants are mostly worried about disruption to their process when thinking about credit scores rather than performance
AI
- Everyone is thinking about AI, whether they are talking about it or not (and there are plenty of people talking about it)
How AD&Co and Optimal Blue Are Transforming Pipeline Risk Management for Loan Originators (Yvonne Chen)
At the Optimal Blue Summit 2026, we connected with loan originators and our alliance partners at Optimal Blue to discuss the evolving challenges in the mortgage origination sector. The conversations and conference sessions reinforced the patterns we've been seeing: Origination is a thin margin business, and originators must carefully manage the uncertainty and financial risks from locking rates at the beginning of the application process through to loan sale. Lenders manage their pipelines across agency and non-agency loan products while simultaneously borrowing closing funds and hedging to protect their profit margins – all while contending with interest rate volatility, fallout risk, basis risk in non-QM products, and borrower renegotiation. Fallout rates have climbed in recent years as borrower behavior shifts and competition intensifies in a low-volume market, making accurate pipeline risk management more critical than ever. Optimal Blue and AD&Co see the persistent need for the kind of sophisticated analytics that we can provide to help lenders stay ahead of these challenges.
AD&Co was featured on a panel where Matteo Caracciolo-King had the chance to present a first look at our insights on consumer behavior in the application process based on Optimal Blue’s national application data set. Originators were keenly interested in forecasting application stage transition probabilities, which vary over time and across interest rates, as well as the kind of financial risk metrics that AD&Co can provide. The conference confirmed our view that, as pipeline hedging grows more complex, particularly with a fast-growing non-agency market, we see a meaningful opportunity to help originators strengthen their risk management through advanced analytics integrated into the Optimal Blue platform they already rely on.
The S-Curve Archives
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ThoughtsIntroduction
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.
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Thoughts
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.
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Thoughts
According to a report by the Research Institute for Housing America, climate change risk is rapidly increasing in the housing industry and will continue to demand more attention and regulation in the near future.
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Thoughts
Mortgage market participants are keenly aware that the Federal Reserve has been scaling back its UST and MBS purchases and factoring the outcomes of its actions on stakeholders across markets.
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Thoughts
The growing prevalence of artificial intelligence in the mortgage industry is shining a new light on the human biases that have pervaded the industry since its inception. AI is meant to bring fairness and objectivity to mortgage decisions, but it can’t perform fairly if it was built on an unfair system.
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Products
The LDM v3.0.2 library adds AutoLDM to the v3.0.1 library.
Key benefits include:
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EventsWe at Andrew Davidson & Co., Inc. (AD&Co) are once again thrilled to celebrate Pride Month, especially the contributions of LGBTQ professionals in the field of finance including affordable housing policy and the GSEs. This year, in addition to celebrating, we are also paying increased attention to the challenges that LGBTQ individuals face, particularly around issues of housing. Our pride in our LGBTQ staff and community sits alongside our concern about discriminatory lending practices, including in mortgages. As of February 2021, for the first time, lesbian, gay, bisexual, transgender, queer, and questioning (LGBTQ) Americans will be protected from housing discrimination under the Fair Housing Act.
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News
For several years, AD&Co has tracked the total rate of return (TRR) performance of the GSE CAS and STACR CRT in its U.S. Mortgage High-Yield Indices. The AD&Co Mid-Tier index constitutes a broad market measure of the TRR performance of GSE CRT. The related sub-indices segregate the CRT market into 4 index Tiers by attachment point, reflective of the credit exposure of the various classes of underlying CRT ranging from B to M1.
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EventsWe at Andrew Davidson & Co., Inc. (AD&Co) stand in solidarity with the Asian community and speak out against the xenophobic ignorance that has led to increased racist attacks against Asians. We protest against these hate crimes. This is a time to celebrate the richness that we have gained from the diversity of the Asian culture. We pledge to support the heritage that is part of what makes us American.
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Events
What does it mean to be mentally healthy? The answer is different for everyone. With all the extra anxiety that many of us have experienced since 2020, whether from uncertainty about COVID-19 or from other experiences that may be new to us, it’s important to acknowledge that it’s alright to not feel alright. Fortunately, there are numerous resources that are available locally, nationally, and in some cases through your workplace or benefits package. We might start by finding out what makes us feel better.