Early Payment Default (EPD) Overview

The intent of the following article is to document and demonstrate methods that mortgage industry lenders use to track and report mortgage loan Early Payment Default (EPD) statistics.

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In the mortgage industry an Early Payment Default (EPD) is a mortgage loan that goes 90+ days delinquent or into a default status in its first year. Early Payment Default (EPD) is one of the strongest indicators of possible mortgage fraud. As a result, most mortgage industry investors are very concerned with identifying EPDs and performing quality control checks to determine if mortgage fraud has occurred.

The “Reporting Early Payment Default (EPD)” section of this article details steps for creating a report that an investor might use to track and report a seller’s EPD percentage. A high percentage of loans with early payment default from a single seller could represent a significant risk to the investor. The Sample Early Payment Default (EPD) Report in this article can be used as a model for a stand alone seller EPD report or incorporated into a comprehensive Seller Scorecard report.

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