MAXEX Launches Private Market Exchange For Trading Mortgage Loans

MAXEX, LLC, a residential mortgage loan exchange provider, announced the public launch of its digital platform and market exchange for buying, selling and settling mortgage loans through a single counterparty. MAXEX is the only platform in the mortgage industry to offer a centralized clearinghouse that enables buyers and sellers to trade anonymously with multiple counterparties using a single standardized contract while simultaneously reducing costs and increasing the efficiency of secondary mortgage market transactions.

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The MAXEX platform features best-execution pricing and access to a wide range of qualified buyers and sellers. To date, MAXEX has facilitated more than $2.3 billion in initial trading activity and participated in 16 securitizations of more than $500 million in residential mortgages. MAXEX has been approved for trading by many of the most active secondary mortgage market buyers including major Wall Street dealers, money center banks, insurance companies and a growing pipeline of other premiere buyers. J.P. Morgan has been a strategic commercial partner in MAXEX since late 2017 and MAXEX’s recent funding round was led by Moore Asset Backed Fund, LP, an investment fund managed by Erik Siegel of Moore Capital Management, LP.

“As we’ve examined the US mortgage market, we see an opportunity for MAXEX’s exchange and infrastructure to benefit both buyers and sellers of all types and sizes,” said Siegel. “The launch of MAXEX’s digital platform and exchange will help improve the transparency, execution, efficiency, functionality and growth of the secondary mortgage and origination markets. We are excited to partner with MAXEX and look forward to being a part of their future success.”

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Not only does the MAXEX platform simplify the loan trading and settlement process, it also automates the entire workflow through its standardization of the legal contract, underwriting guidelines, seller guide, pricing, loan delivery, loan review, condition clearing, purchase advice, funding and settlement and servicing transfer.

“The aggressive move of big league investors onto the MAXEX trading platform suggests a long-awaited secondary market opening outside the government footprint,” said Jim Parrott, former senior housing policy advisor to the White House. “What makes this particularly interesting is that MAXEX is not simply opening the non-agency market up to investors, as you’d see with the revival of the private label securitization market, but also to small, community lenders that have been long dependent on the market giants Fannie and Freddie.”

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“With over $15 trillion loans outstanding and $1.7 trillion per year in new originations, the U.S. mortgage market is the second largest debt market in the world, behind only the U.S. Treasury market, and yet mortgage loans have never been successfully put on a centralized exchange,” said Tom Pearce, CEO and Chairman of MAXEX. “For decades, the secondary mortgage market has struggled under the weight of old, inefficient business practices that make trading loans complex and expensive, disadvantaging small to mid-sized lenders. MAXEX levels the playing field for all participants while reducing costs and providing broader market access.”

The MAXEX platform offers a dramatic leap forward for mortgage trading. Traditionally, buyers have dictated how every secondary market loan transaction is completed. On average, each seller is set up to transact with 11 buyers and each buyer has over 10 unique activities the seller must navigate to correctly underwrite and sell a single loan. By forcing all parties to comply with each buyer’s unique processes and operational constraints, loan trading becomes more costly and risky. It also limits the number of relationships between buyers and sellers, thereby reducing market access and opportunities for growth. The MAXEX platform simplifies all transactional complexities for both buyers and sellers and standardizes the trading and settlement by utilizing one centralized counterparty, MAXEX Clearing.

“The secondary mortgage market has been in dire need of innovation and modernization,” said Steve Abreu, founder and CEO of Newfi Lending, an active seller on the platform. “MAXEX has brought revolutionary change to the process of trading mortgages by creating a linear, systematic platform and exchange that brings transparency and efficiency and opens the market to an innovative way to buy and sell loans.”

With seller adoption accelerating (more than 80 sellers are currently approved to trade on the exchange and growing), MAXEX aims to become a market utility that offers private market solutions designed to support the non-conforming market while continuing to embrace the standards set by Fannie Mae and Freddie Mac.

MAXEX supports powerful execution strategies, so buyers can upload rate sheets and identify specific types of loans and loan pools to purchase. Sellers can quickly import loan attributes, view pricing and lock and register loans for sale all in real time. MAXEX’s proprietary rules-based audit and review engine performs granular image classification, document inclusion checks, data extraction and validation, cross-document data verification and program product eligibility tests on each loan file to facilitate cost effective and efficient loan trading and settlement.

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.