Development of Predictive Analytics Tools and Price Wizards for Distressed Note Hedge Funds
Predictive Analytics Tools Price Wizards Distressed Note Hedge Funds
Approximately 60% of our practice is comprised of alternative asset hedge funds that purchase pools of distressed mortgages. We have used our combination of technology skills , Google Cloud Platform to “mash up non-table data” to apply predictive analytics to estimate exit value for properties, profile buyers, and generate sensitivity analysis for prospective investors and reports for g investors.
The exit value module that computes the projected amount to be realized from the sale of the loans is highly complex and utilizes a significant number of numerical analysis techniques such as linear regression and ANOVA. These computations are utilized to allocate purchase price to individual notes or assets where a basket purchase is made.
The CRM components of the salesforce platform provide a mechanism to record contact with homeowners and borrowers, and the accounting system components permit costs to be allocated to specific loans or assets.
We built out the predictive analytics tools and computational tools to facilitate the calculation of where to hold the note or sell, whether a short sale would make sense, and the ability to quickly analyze the impact of a negotiation to forebear a portion of a note, forgive all together or just sell the note and get out.
The notes can be offered to our outside investors based upon a formula value. We developed a tool to calculate the value based upon various assumptions. There is also a basket pricing module which helps pick notes to give investors a chance to purchase a pool of notes with an average expected return which guides our client’s pricing decisions.
There is an additional tool that helps determine which lenders or equity our client should use to match economics with investor profiles to help them get the best price for the notes they sell. All of the techniques involved in tools we have built we derived from financial and statistical analysis techniques we have learned through working with property owners.