Service providers have been busy developing products and establishing relationships that will help mortgage bankers execute their secondary marketing strategies. Some of the vendors are providing services that not only streamline those activities, but also reduce risks. Others have created or expanded programs for the trading of whole loans and loan pools.
Investors gain real-time access to data about residential mortgage-backed securities through BlackBox Logic’s Crystal Logic, a Jan. 17 news release said. A “comprehensive” database of 7,400 RMBS with 21 million Alt-A, jumbo and subprime loans with remittance records dating back to 1999.
BlackBox said it uses using numerous metrics to create customized reports. Portfolio performance can be evaluated by comparing entire deal or partial deal data to the broader mortgage market or portfolios with similar characteristics.
Direct mortgage note buyer Ameirnote Xchange LLC is now purchasing and funding, first-position, performing negative-equity mortgage loans.
“From our experience, most of the seller-financed mortgage notes that are upside-down are the ones with the highest default rates,” states Abby Shemesh, director of loan acquisitions at San Francisco-based Amerinote Xchange. “Borrowers find out that they are paying for a home that is worth less that the mortgage they owe and become angry. And they realize that, in most cases, the property seller/private note holder never pulled nor do they report the borrower’s payment habits to the credit bureaus — whatsoever.”
“This means the only consequence to not paying the note is eviction and foreclosure, leaving their credit rating unscathed,” Shemesh continued. “For most borrowers, it is easier to completely walk away from the home instead of putting money into a bottomless pit.
“This commission-free funding service we are now offering,” Shemesh says, “will be a golden parachute to many note holders that do not want to get wrapped up in legal issues, foreclosures and nasty dealings with mortgage borrowers over lost equity. We will purchase the note and restructure it to fit within our portfolio, creating a win-win-win situation for all parties involved.”
Boca Raton, Fla.-based Quicksale.com has begun a new loan disposition program that will handle loan pool marketing and sales for several banks, lenders and other investment groups throughout the United States that are motivated to liquidate their performing and/or non-performing assets in record time.
The disposition program, dubbed QuickSale.com Loan Pool Exchange, reportedly provides a central, one-stop place for brokers, lenders, bankers and investors to buy and sell these pools in bulk. In addition, the company’s “easy-to-use,” custom-built interface allows investors from around the world to search for real-estate-owned assets and other loan pools — residential and commercial — that are for sale in their target markets and/or price ranges.
“We engage first-time buyers, investors and their agents at the local and international levels to sell them bundled distressed assets through a proprietary online sealed bid auction process,” said Patrick Butler, QuickSale.com Director of Partner Relations.
“We are fortunate at QuickSale.com to have the strategic partnerships with our sister companies to provide investors with a totally integrated solution for REO or distressed note disposition,” said Butler. “Additionally, these solutions are all web-based, enabling investors to capitalize on the more than 50 years of experience of our management team in the distressed asset space. The objective is to turn the inventory as rapidly as possible so investors can apply their capital to other purchases.”
Professional fixed income traders are given access to live and executable order flow across asset classes, through New York-based Bonds.com Group Inc.’s broker-dealer subsidiary, BondsPro.
BondsPro displays the live and executable orders rather than the standard requests for quote model, a first for fixed-income markets, according to Bonds.com President George O’Krepkie. The BondsPro order book receives an estimated 70,000 live bids and offers on daily basis. BondsPro displays live ticking prices with over 50 million price updates daily. These orders show full depth of market along with TRACE prints.
The BondsPro model drastically reduces the cost of supply meeting demand in the fixed income markets globally by matching buyers and sellers in an “all-to-all” fair and equal electronic trading environment, according to O’Krepkie. The net result for clients is that Bonds.com creates the opportunity to achieve best execution. Trading is available in Global Corporate Credit: Investment Grade, High Yield, and Emerging Markets; and Mortgage and Asset Backed securities.
“BondsPro addresses a critical need for fixed income traders, allowing them direct access to our large pool of liquidity and immediate execution against our participants’ inventory,” O’Krepkie said. “Our network brings numerous niches and segments of the global fixed income markets together for the first time.”
To help reduce risk for purchasers of whole loans, Atlanta-based Equifax Inc. has developed an online platform consisting of three products that provide pre-bid, post-bid and surveillance credit risk analysis using borrower credit information and other data, including loan performance history, to better predict loan delinquency, default and prepayment and to more accurately value and price loan investments using hundreds of leading indicators of mortgage loan performance and highly accurate risk models.
Denver-based Titan Lenders Corp. offers its whole loan purchase review to reduce risk for mortgage bankers and investors. The program was developed to provide the technology and expertise necessary to determine the quality of loans prior to purchase. Delivered via Titan’s Cerberyx platform, WLPR empowers investors to vet standard and negotiated contract terms and variances, providing full visibility to loan quality, pricing, and suitability with the scoring of loan pipelines. The service facilitates the “hands on” management of compliance, fraud risk, data integrity, income and valuation, servicing data and potential integration with secondary markets and/or rating agencies.
St. Louis-based Lenders One Mortgage Cooperative — a national alliance of community mortgage bankers, correspondent lenders and suppliers of mortgage products and services — has renewed its contract with preferred investor Mortgage Services III LLC, a majority owned subsidiary of First State Bank of Mendota, Ill.
The partnership offers Lenders One members direct access to a funding source as well as special pricing for all of their loans, according to Lenders One CEO Scott Stern. In turn, he says, MSI receives immediate networking abilities and opportunities to grow its portfolio with Lenders One’s national group of community mortgage bankers.
Mortgage Services specializes in a number of different loan programs from conventional fixed loans, FHA loans to adjustable-rate mortgages. The company is based in Bloomington, Ill.
Lenders One also has added to its membership Walnut Creek, Calif.-based Pacific Union Financial LLC, a national mortgage banking company that originates and aggregates residential mortgages by funding and purchasing loans through its retail, wholesale and correspondent channels.
Partnering with Pacific Union, says Lenders One’s Stern, will provide cooperative members with additional secondary market expertise through correspondent and warehouse channels, enabling them to expand and build their product lines, capture more purchase market share and compete with the larger aggregators. Pacific Union, he says, also will support both retail and wholesale platforms for Lenders One members, and provide the flexibility for members to develop their own product mix.
Lenders One also has renewed its investor partnership with the MetLife Home Loans’ Reverse Mortgage division of MetLife Bank, N.A., a subsidiary of MetLife Inc., for another two years. The relationship allows MetLife to purchase cooperative members’ closed reverse mortgages and fixed-rate home-equity conversion mortgage products.
“More individuals are exploring reverse mortgages as an option to help meet some of their financial obligations,” said Michael Mooney, assistant vice president with MetLife Home Loans. “Lenders One members are taking advantage of reverse mortgages, which further solidifies our partnership.”
Reverse mortgages are gaining more interest and they are clearly reflected in the increased number of loans from Lenders One members, according to the statement. During the second-quarter 2011, reverse mortgage volume by Lenders One members was $27.3 million compared to $23.8 million for the same period in 2010.
“The success of our members,” said Lenders One CEO Stern, “is predicated on ensuring they have access to the products that are most relevant and partnering with the right providers to offer those products to our members.”
In another expanding alliance, Lenders One added Franklin American Mortgage Co. as its newest preferred investor. Based in Franklin, Tenn., Franklin American is a national banking firm offering diverse, flexible mortgage options through retail, wholesale and correspondent channels.
“As a result of its status as a preferred investor, Franklin American Mortgage Co. will have access to our membership base of premier mortgage bankers while our members will have access to special terms from Franklin American Mortgage Co. due to the collective buying power of Lenders One,” said Stern. “And as its newest investor partner, Lenders One can extend Franklin American Mortgage Co.’s key delivery options and robust technology to cooperative members for loan funding and underwriting.”
Overland Park, Kan.-based LeaderOne Financial, thanks to efficiency gains from Denver-based Secondary Interactive’s technology platform to manage trades and performance, has been able to successfully transition to mandatory commitments and triple its mortgage production in one year.
LeaderOne Financial’s secondary marketing desk, says LeaderOne Chief Information Officer Michael Brady, no longer has to lock each loan with an investor, eliminating the lock desk chaos that occurs in a best efforts environment. LeaderOne, he says, also benefits from Secondary Interactive’s integrated platform with Optimal Blue, getting real-time, accurate investor pricing and guideline information.
The risks of multi-party TBA mortgage trades, commonly known as “round robin trades,” and the number of failed trades have been reduced as a result of the global web-based electronic trading network built by New York City-based Tradeweb Markets LLC that now includes a new “round robin” function.
In the first half of 2011, more than $166 billion in TBA mortgage trades passed through Tradeweb Markets electronic system, which was created to help thousands of the largest banks, asset managers, central banks, pension funds and insurance companies buy and sell fixed income and derivative instruments. During the same period, the notional volume of multi-party TBA mortgage trade failures fell by more than half as a result of the system, which was developed in collaboration with BlackRock, Credit Suisse and Goldman Sachs to reduce the risk of failed trades between multiple parties.
Atlanta-based The StoneHill Group, a national mortgage outsourcing services and staffing solutions provider, has expanded its collateral audit services aimed at Federal Home Loan Bank members to will include loan and portfolio eligibility audits, Eligibility process review and training, pledged portfolio testing, collateral pool scrubs and ongoing collateral management and reporting.
StoneHill said it has been working directly with the FHLB Atlanta providing collateral audit reviews since 2000 and will use its experience and methodology to help banks avoid the numerous pitfalls and mistakes that FHLB Members commonly make during the process of pledging assets to obtain advances.
“With the growing complexity of the FHLB’s credit and collateral policy it is becoming increasingly difficult for member banks to ensure pledged assets meet the Federal Home Loan Banks’ standards in order to obtain maximum borrowing power,” said StoneHill Founder, President and CEO David Green. “By using our experience working with the FHLB in the collateral review process, we can assist member banks directly by identifying high quality loans, scrubbing pools to increase collateral eligibility and verifying the accuracy of documentation before collateral is pledged.”
Southfield, Mich.-based GCC Servicing Systems, a provider of mortgage servicing technology and solutions, has made available its investor accounting and reporting component through the company’s professional services suite. By offering the product through its professional services suite, GCC enables servicers to utilize the benefits of the investor accounting and reporting module without licensing the entire G/SERV loan servicing platform. This also enables servicers to enhance the functionality of their loan servicing system of record without incurring the cost and effort of a conversion.
The component enables servicers to meet the accounting and reporting requirements of Fannie Mae, Freddie Mac, FHA and Rural Development loans and includes agency default reporting. The GCC professional services team works with each servicer to establish the needed data requirements and customize the functionality, such as for independent investors.
Fort Washington, Pa.-based Aklero Risk Analytics, a provider of automated data and document validity assurance for the mortgage industry, has become the exclusive provider of mortgage quality control services to members of Washington, D.C.-based Business Solutions, a subsidiary of the American Bankers Association.
“We believe the quality control services and loan quality management platform offered by Aklero uniquely distinguish the firm from its competition,” said Bill Kroll, president of Business Solutions. “We’re excited that our members now have the ability to access these services at very competitive prices.”
Aklero’s automated platform centralizes the data, documents and details associated with an audited mortgage file, enabling banks to receive accurate quality control results and dynamically drill into each finding to determine patterns that quickly identify issues with loan quality production.
Aklero, with its selection, joins an elite group of 12 mortgage industry firms that have entered into similar alliances with Business Solutions, enabling ABA member banks to enjoy significant advantages in terms of pricing, delivery options, technology and support.
Dallas-based CU Members Mortgage, which provides mortgage services to more than 1,000 credit unions, signed 23 new credit union partners during its fiscal Q3 and Q4 2011.
“We believe credit unions are looking for efficient and innovative ways to enhance their mortgage services offering to provide their members with greater value today and well into the future,” states Linda Clampitt, senior vice president of CU Members Mortgage. “We look forward to helping our new partners increase their mortgage business while helping their members achieve their dreams of homeownership.”
The new credit unions range in size from $6 million to $1.8 billion, she says.
Freddie Mac and the Credit Union National Association have renewed their alliance that provides participating credit unions with a comprehensive set of technological services, mortgage products, and correspondent lending, including Freddie Mac borrower outreach initiatives.
“This renewed alliance ensures that, even in this challenging mortgage environment, CUNA member credit unions will have a package of products and services that can help their members with affordable lending solutions,” said Wes Millar, senior vice president of CUNA Strategic Services.
“Extending our alliance with CUNA will enable participating credit unions to continue accessing a full range of correspondent mortgage lending services and competitive secondary market strategies,” said James Cotton, vice president for regional and community lending at Freddie Mac.
The Freddie Mac/CUNA alliance, in addition to providing expanding execution and mortgage product options, also offers cash sale advantages on a wide variety of mortgages available through Freddie’s Single-Family Seller/Servicer Guide, among other benefits.