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Technology Achieves 100 Percent Investor Adoption

Mortgage Capital Trading, Inc. (MCT), a leading mortgage hedge advisory and secondary marketing software firm, announced that it has gained unprecedented industry-wide technology adoption among the investor aggregator community. MCT officially unveiled the Bulk Acquisition Manager (BAM) within its capital markets software platform, MCTlive!, in July of this year.

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BAM centralizes and streamlines the entire process of packaging and securely transferring whole loan information and bids. The technology provides a web interface that enables lenders’ bid tapes to be securely and efficiently delivered to approved buyers following best execution analysis in a centralized repository. Investors are lauding BAM as the most robust, easy-to-use, scalable, and secure bid tape management technology on the market, which are cited as the primary reasons for rapid investor adoption.

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“We initially developed BAM to address the Nonpublic Personal Information (NPI) security risk associated with transmission of bulk bid tapes via email, but the efficiency gains and improved market color for both counterparties drove rapid adoption,” said Phil Rasori, COO of MCT and architect of BAM. “MCT represents 30 to 40 percent of approved sellers for the average correspondent investor with about 1,200 bid tapes flowing through BAM every day. BAM is raising the bar for other bid tape management solutions, with one major investor already leveraging BAM to serve as their database of record for bulk bid tape transactions. BAM is well on its way to becoming the defacto standard in the mortgage industry.”

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BAM includes tiered user administration, putting decision-making about access to transaction data in the hands of lender clients and their investors. Overall, BAM is improving the industry’s existing loan sale practices with quicker best execution pricing for bulk bid tapes, better communication and transparency, enhanced data security, greater organization and consistency, endless scalability, and optimization of the entire process from start to finish.

To make BAM’s functionality conveniently integrate with existing processes, MCT established two different methods for investors to securely transmit bid tape files. This can be done by accessing MCTlive!’s secure browser-based user interface or via a Restful API (Application Programming Interface) which enables MCT to integrate with various loan exchange platforms and homegrown investor systems. To date, nearly all investors have elected to use MCTlive! due to its extreme ease of use, built-in metrics, and robust user administration.

Company officials at MCT say that plans are in progress to expand BAM and its user base, yielding even more improvements to management of the bid tape transfer process. Moving forward, investors, lenders, traders, account executives, and the bid tape market as a whole will realize additional benefits through feature development within MCTlive! and the Bulk Acquisition Manager.

About The Author

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.

New Solution Aims To Reduce The Cost Of Origination And Investor Due Diligence

Overture Technologies and ATS Secured have launched the Settlement Coordinator Workstation, a platform which addresses originators’ and investors’ unsustainable high cost to originate and buy loans. The solution combines the industry’s leading independent automated loan underwriting system with tools to conduct compliance checks, coordinate loan settlement, distribute loan proceeds and secure loan data integrity.

“We are committed to helping our customers profitably transfer credit risk at scale,” said Kim Thompson, EVP, Overture Technologies. “The Settlement Coordinator Workstation is an innovative solution that eliminates redundant operations between originators and the buyers of their loans to ensure loan purchase, avoid assignee compliance liability under TRID and automate secondary market operations – all at a cost and speed the market demands.”

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Overture and ATS created the Settlement Coordinator Workstation to address credit and regulatory compliance of loans before the loan closes – the stage in which defects can be most effectively eliminated. The solution leverages Overture’s Bid application, the only technology that enables investors to underwrite, price, onboard, and surveil mortgage assets on a single platform. ATS Secured enables the coordination of settlement services and the distribution of loan proceeds all on one secure and auditable processing platform.

The Settlement Coordinator Workstation provides invaluable tools to settlement coordinators, who are charged with providing critical due diligence and coordination functions in accordance with investor guidelines and policies to ensure loan purchase and efficient delivery of the loan asset to the investor.

“We think expansion of the use of settlement coordinators is key to more efficient interaction between originators and investors,” Thompson continued. “Today, multiple, redundant reviews, conducted pre- and post-closing, have driven the cost to originate and buy a loan to over $9,000. That’s unnecessary, unsustainable and has done nothing to provide the certainty of purchase that originators need,” she said. “By offering this solution, we’ll enable more service providers to perform settlement coordination functions, including those who are already involved at this stage.”

Overture’s Eligibility Findings Report, offered as part of the Settlement Coordinator Workstation, details the data and documentation requirements for investor loan purchase, similar to the reports originators receive on Freddie Mac and Fannie Mae loans. Once the originator submits this information on the platform, the investor reviews the loan and if acceptable, locks down the data for accurate assessment of compliance and generation of settlement documents. Then, using ATS’ functionality, settlement coordinators can arrange eClosings, electronic recording of collateral documents and disburse loan funds.

“We are energized by the opportunity to work with Overture to bring this innovative new solution to market,” said Wes Miller, CEO of ATS Secured. “Our focus has been on creating a platform that enables the transparent collaboration and interaction TRID requires at settlement – from disclosure to disbursement. So this opportunity to partner with Overture to address this acute industry need was a natural fit for us.”

Progress In Lending
The Place For Thought Leaders And Visionaries

Online Help For Investors

HomeUnion, an online, real-estate investment management firm enabling value investing in single-family rental (SFR) properties announced today that its investment website now provides investors with sales and rent comparables to help validate and frame value of available single family rental properties.

HomeUnion provides comps for the properties they have selected using proprietary algorithms developed by its data scientists and local-market experts. These comps allow investors to see recent sale prices and rental rates of “comparable” properties—ones of similar size, location, special features and room make-up. Sales comps are a critical element in valuing the acquisition price of investments and rent comps complete the investment picture by giving investors confidence that the property can generate the income needed to reach the projected returns.

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“Investing in SFR properties is like any other investment. People want to know that they are paying a fair price for the asset, and that the investment projections are based on real data from similar properties in a specific market,” said Don Ganguly, founder and CEO of HomeUnion. “By providing both purchase and rent comps, online, we give our remote investors a better view of both the earning potential of a property and the market where the house is located. This in turn gives them the confidence that the projected returns are sound and that the property is indeed a solid investment.”

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HomeUnion’s investment site allows individuals to invest in single-family real estate, an asset class that was previously not available to the remote or hands-off retail investor. With HomeUnion’s guidance, investors choose properties that best fit their investment needs, income generation, growth, balanced or a combination of all. HomeUnion manages the acquisition for the owner and then handles the ongoing management of the property, which includes finding solid tenants and maintaining the property.

Progress In Lending
The Place For Thought Leaders And Visionaries

A Good Year

I don’t know about you but I am overloaded on QM, Non-QM, updated rules, regulations and all the associated hot air. So, instead of continuing to toil over how, what, when and where things could possibly go wrong, I am going to think about all the good things that happened last year and what I am looking forward to this year.

One of the best things that happened last year was the growth of the industry. Low rates and increasing home values brought us a plethora of refinances, and while increasing rates have caused dips in purchase money markets, overall we are better off than we were four years ago. New companies are emerging and brokers, whose demise has been forecast since 2008, are still around and in many cases growing.

The long-anticipated punishing regulations have been issued, argued over, revised and are now ready to implement. And while we do not appreciate some of the changes they brought, it has caused us to rethink and redo our policies, practices and procedures. Technology advances have made many of these changes less burdensome and our focus is now, more than ever, on how to do things right; not just fast.

Our old nemesis, fraud, is still around, but has slid further back into the hole from whence it came. The delinquency and foreclosure rates are the lowest they have been in years and prospective homebuyers are more encouraged.

So what does that mean for this year? As the Chinese say, “May you live in interesting times” and the folks in this business surely know interesting times. We know the start of 2014 is certainly going to be interesting. However, we have tackled tougher issues than this and survived, so there is no doubt that, with a few hiccups along the way, we will soon have these regulation changes under control.

Interest rates will do what they always do; go up and down, but not necessarily in that order. There will be more companies emerging as well as some consolidations — the M&A market promises to be very busy in 2014. Servicing will face its challenges, but with more stable and performing loans in the portfolio, servicers will be able to focus on those internal processes that are demanded by the regulations.

The one big question mark I see is the focus on quality. While agencies and investors focus on the demand for more and more reviews, lenders have moved further and further away from the purpose of doing them; making sure there is reliability in the processes so that the next loan will be just as good as the one just inspected. When and how will lenders stop focusing on “data elements” and instead focus on the big “D”? No, not Dallas, but what the “Data” is actually telling them. If we get these two pieces of the puzzle under control then 2014 will be one of the best years for our industry in a long, long time.

TLI-Listen-Now

About The Author

[author_bio]

Rebecca Walzak
rjbWalzak Consulting, Inc. was founded and is led by Rebecca Walzak, a leader in operational risk management programs in all areas of the consumer lending industry. In addition to consulting experience in mortgage banking, student lending and other types of consumer lending, she has hands on practical experience in these organizations as well as having held numerous positions from top to bottom of the consumer lending industry over the past 25 years.

We’re Slowly Getting There

The new issuance private-label US residential mortgage-backed securities (RMBS) market will slowly restart in 2014, and credit quality implications will vary given the different forces at play, according to a new report from Moody’s Investors Service, “2014 Outlook – US RMBS and Servicer Quality.”

New transactions in 2014 will be of lower credit quality because originators will have trouble maintaining volume in loan pools as refinancing activity decreases. This will lead originators to relax underwriting standards, resulting in further deterioration of the credit quality of the collateral backing the pools.

Furthermore, the shape of investor protections for new transactions is still in flux, with issuers continuing to explore different representation and warranty (R&W) frameworks. “Institutional investors and RMBS issuers have not yet reached a consensus on the appropriate balance of liability and protection,” says Kruti Muni, Moody’s Senior Vice President and Manager. “Investors will have to decide which R&W framework will provide a level of credit protection they deem acceptable.” Here’s the full scoop:

In addition, the creation of the qualified mortgage (QM) class will make it more expensive to originate non-qualified mortgage loans, because of the risk of borrower legal challenges, whose costs and penalties RMBS trusts would bear. “Because of the added risk, lenders will charge more to non-QM borrowers, and the loans will be more expensive to hold in a trust,” cautions Muni. Losses on pools with non-QM loans will increase as borrowers challenge foreclosures, causing trusts to incur legal fees, lengthen foreclosure timelines, and potentially pay penalties if the borrowers succeed.

Conversely, the collateral strength of outstanding RMBS will be stronger because the remaining borrowers in the pools will have stronger credit profiles, thus boosting the performance of those deals. “Improving loan-to-values indicate the credit strength of the remaining borrowers in the pools, and faster liquidation timelines weed out borrowers with weaker credit profiles,” notes Moody’s Associate Managing Director Debash Chatterjee. “Liquidating the backlog of severely aged properties in a portfolio will also lead to a decline in pool losses toward the end of 2014.”

The portfolios of non-bank servicers such as Ocwen, Nationstar and Green Tree continue to grow, fueled by large banks, which continue to shed their most seriously delinquent loans. Despite the added servicing capacity, completed foreclosure timelines will continue to rise because of the large number of complicated and unworkable foreclosure cases remaining in servicers’ backlogs. “However, timelines for new foreclosures will improve as judicial states clear their foreclosure pipelines,” says Chatterjee.

About The Author

[author_bio]

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.