Advanced Data: Jobless Borrower Index Slows to 0.8% in 2016

Advanced Data Corp., Milford, Pa., said its Jobless Borrower Index, which measures the percentage of borrowers that were unemployed within seven days of their scheduled mortgage closings, slowed to 0.8 percent in 2016, compared to 1.01 percent a year ago.

For the fourth quarter, Advance Data said its index fell to 0.71 percent, compared to 1.01 in fourth quarter 2015.

“Lenders that fail to take every precaution to insulate themselves from doing business with borrowers that won’t be able to repay their loan, perhaps because they were unemployed at the time of their mortgage closings, are exposed to serious penalties and buyback risk,” said Advanced Data CEO Allen Johnson.

The index reached a high of 4 percent in second quarter 2011, then hit a three-year low of 0.53 percent in fourth quarter 2013, as well as 0.54 percent in fourth quarter 2012.

“Lenders face many regulatory burdens, and that scrutiny will continue to increase in 2017, which can make ensuring that every borrower meets the basic parameters of a loan more difficult,” Johnson said. “But there are automated platforms that can eliminate the risk that the AD-JBI measures. In addition, they can generate efficiency and make the origination process more profitable for their financial institutions.”