New Trading Platform Drives Automated Bidding And Trade Execution

Mortgage Capital Trading, Inc. (MCT), a mortgage hedge advisory and secondary marketing software firm, has officially launched Trade Auction Manager (TAM) to enable more efficient bidding of TBA mortgage-backed securities used by lenders to hedge their open mortgage pipelines. The browser-based software module is accessible via MCTlive!, the company’s award-winning comprehensive capital markets platform.

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TAM completely digitizes a formerly manual communication process to confirm time-sensitive TBA trades that were once largely phone-based. TBA trading, particularly with regional broker-dealers, is the last remaining secondary marketing function that relies on telephone communications, which TAM now successfully automates.

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MCT developed TAM in collaboration with multiple lender clients and broker-dealers who participated in the testing and successful soft launch in early 2019. With the introduction of TAM, the mortgage industry now has a powerful TBA trading platform that allows broker-dealers to compete for a higher volume of trade requests, while lenders gain thanks to expansion and automation of the competitive bidding process.

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“TAM is a seismic shift for the mid-sized lender – increasing execution, liquidity, and transparency, while connecting them digitally with their regional dealers for the first time,” said Phil Rasori, COO at MCT. “The initial experience is showing that TAM will deliver a significant enhancement in execution for MCT clients.”

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Additional benefits of TAM include greater accuracy, increased speed, and a reduction of data entry errors. When using TAM all transactions are automatically recorded, creating heightened reliability and trackability of trades. TAM leverages a single database of record, which centralizes critical data and simplifies trade reconciliations. TAM integrates seamlessly with MCT’s hedging and loan sale platforms or it can be utilized independently as a standalone solution.

Advancing Secondary Marketing

Lenders are rightfully taking a hard look at service and profitability. We talked to Chris Anderson, the Chief Administrative Officer of Mortgage Capital Trading, Inc. (MCT) about this very issue. Founded in 2001, Mortgage Capital Trading, Inc. (MCT) has grown from a boutique mortgage pipeline hedging firm into the industry’s leading provider of fully-integrated capital markets services and technology. MCT offers an array of best-in-class services and software covering mortgage pipeline hedging, best execution loan sales, outsourced lock desk solutions, MSR portfolio valuations, business intelligence analytics, mark to market services, and an award-winning comprehensive capital markets software platform called MCTlive! MCT supports independent mortgage bankers, depositories, credit unions, warehouse lenders, and correspondent investors of all sizes. Here’s what Chris Anderson told us:

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Q: MCT has traditionally been known as a hedge advisory firm but has successfully transitioned into a full-service integrated capital markets services and technology firm. Can you tell us a little about MCT’s genesis and where the company is at today?

CHRIS ANDERSON: MCT was founded in 2001 with the primary focus of helping mortgage bankers make the switch from selling loans at best efforts to the more profitable mandatory trading in the secondary market. A big part of our value proposition has always been using a business model that provides very hands-on, highly service-oriented secondary marketing support and guidance. We have the largest team of in-house traders and analysts in the industry to ensure excellent service and analytics. This is unique in the sense that each of our lender clients has a dedicated team of three traders and analysts to work with who support their hedging program. One differentiator that set MCT apart early on was our recognition of the importance of providing our clients support in very robust best execution analysis and loan sale commitments.

To complement our core services, we have developed into a fully-integrated capital markets services and technology firm with a broader product set to support our client base beyond hedging and best execution. We now offer an array of best-in-class services and software covering mortgage pipeline hedging, best execution loan sales, outsourced lock desk solutions, MSR portfolio valuations, business intelligence analytics, reporting, mark to market services, and an award-winning comprehensive capital markets software platform called MCTlive!  We support a number of different mortgage entities that range from independent mortgage bankers to depositories, credit unions, warehouse lenders, and correspondent investors of all sizes.

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Today we have a full-time staff of nearly 100 employees, most of which reside in our San Diego-based headquarters, with additional operations offices is in Philadelphia, Los Angeles, Santa Rosa and Dallas. We have consistently been listed on the Inc. 5000, Inc. 500 and San Diego’s fastest-growing private companies list, and each year we earn a spot on the Best Places to Work list. We see additional growth throughout 2018 and have a strategic plan and infrastructure in place to allow us to grow at a healthy, controlled rate that ensures our client service is always second-to-none.

Q: MCT launched its secondary market technology, MCTlive!, a few years back.  Can you tell us a little bit about it?

CHRIS ANDERSON: Absolutely. We have traditionally been known as a pipeline hedge firm, but over the years have worked hard to strategically transform into an advisory firm with an extensive set of integrated capital markets services and technology. About seven years ago, we recognized a growing need for more contemporary, robust, completely web-based secondary marketing software than what was currently available on the market. We invested in the necessary R&D and roughly five years ago we did a soft launch of the platform — MCTlive! — to our own client base.

Since the launch, adoption of MCTlive! has been wildly successful. We have mortgage bankers, depositories, credit unions and correspondents of all shapes and sizes leveraging it for daily advisory services, comprehensive reporting, live market color, and ongoing education to implement their hedging and execution strategies.

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Whereas the more traditional desktop-based software applications confine secondary market managers to their desks, MCTlive! is purely browser-based — through and through with no installs whatsoever. It can be accessed anytime, anywhere via a secure online interface. We have some clients that have actually executed trades while on airplanes traveling for business in mid-flight.  MCTlive! is delivered on a software-as-a-service (SaaS) basis and resides securely in the Cloud, thus avoiding the issues that accompany traditional on-premise systems.

From a usability perspective, our clients can leverage as much or as little of MCTlive! as they need for their specific business models and extent of secondary marketing experience.  Some may be “power users” while others may need a bit of hand-holding and coaching, which MCT is well-known for and extremely good at. We didn’t want secondary marketing departments having a ton of technology shoved down their throats all at once, which is one big issue with other secondary technologies that are out there. We don’t want clients drinking from a technology fire hose.  As such, we essentially make available a flexible ‘walk before you run’ model whereby lenders can increasingly use MCTlive! as they become more comfortable; or, they can dive right in and immediately start leveraging the entire platform. It’s really what’s best for their secondary marketing department. And, we’re always there to help them.

The addition of MCTlive! takes our business services offering a step further by empowering lenders with real-time online tools, automation, analytics and reporting that gives them enhanced visibility and control over their secondary marketing functions.

Q: When it comes to secondary marketing technology, what do you think the industry could be doing differently to better serve lenders?

CHRIS ANDERSON: This is a great question. One of the things that the industry needs to improve on with secondary marketing technology is being through and through web-based. Many of the systems out there right now require some sort of an install. Put simply, secondary marketing software needs to become more contemporary. Much of what’s out there is dated.

Also, data must be refreshed as frequently as possible. We board clients that have worked with other firms that are still uploading data once or twice per day, or are using systems that can take 45-90 minutes to run a simple hedge position. In volatile markets, this leaves clients with unnecessary market risk.

When a platform needs to be installed, there is of course maintenance that is required by the lender, thus increasing total cost of ownership (TCO).  In some cases, it may require internal IT resources to help manage. Further, the systems need to be more user-friendly.  Some of the models are basically, ‘You own it and you manage it. Good luck.’ These on-premise installs can be tough to work with, especially for a lender that does not have a large secondary marketing department.

When we developed MCTlive!, we made sure it was completely browser-based and delivered on a SaaS basis.  The example that I mentioned earlier where some MCT clients executed trades while on a plane in mid-flight would not be possible with older platforms.  Also, some of our clients are using MCTlive! as a capital markets core system-of-record that also includes business-critical analytics and reporting, which is quickly changing the game. We are starting to see some overhauls of existing systems, but they still have a long way to go. Rome wasn’t built in a day.

In addition, we provide a dedicated team of high-value employees to oversee each and every new hedge client, and we try to do as much of the heavy lifting for our clients as possible. For example, despite my many responsibilities, I am still personally involved with every new client that boards to ensure that we do everything we can to prepare our clients up for a smooth, successful transition. We saw a void in the marketplace, one that lacked a solid marriage between technology and people. The industry could be doing a better job of being more hands-on with traders to work with lenders and the technology to support them.

Q: Mortgage loan trading is starting to go digital.  Where is the industry at today and where do you see it going?

CHRIS ANDERSON: Obviously, on the origination front, the point-of-sale is quickly being automated with borrowers not having to provide paper docs and scans.  Being able to automatically pull things like Verification of Employment (VOE), Verification of Income (VOI), Verification of Assets (VOA), access to the IRS, eSigning capability, etc. is saving a lot of time and enhancing the borrower experience while reducing costs.  In the back-office, eClosings are gaining momentum, too.

In our capital markets world, however, the mortgage industry is rather slow to catch up to the age of digital loan trading and business transactions. But over the next 12-18 months we are expecting to see a continued trend in the adoption of digital mortgage loan trading tools. As an example, bid tape transfer platforms for the investor community, which automate the acquisition of tapes from lenders, has really started to gain quick adoption.

Right now lots of lenders are using manual delivery methods and are likely leaving some profits on the table. But we’re moving toward enhanced automation and real-time trading activity across the board for the entire secondary marketing process. What really matters most is how it is executed. Automation brings more granularity with price, more robust best execution, greater transparency, and optimized trading for both buyers and sellers via sophisticated transaction management platforms.

Also, we’re seeing traditional rate sheets changing as the mortgage industry becomes more digitized.  Currently, bidding transpires at the tail end of the mortgage manufacturing process. Digitizing this will move the pricing and knowledge about spec pay-ups to the point of origination, thus reducing the need for traditional rate sheets.

Q: What are some of the challenges when lenders make the switch from best efforts to mandatory loan trading commitments?

CHRIS ANDERSON: The biggest challenge for lenders is finding the right firm to work with in their transition. There are changes in underwriting, workflows, technology configurations, and accounting processes, as well as ensuring that there are proper third party relationships with broker dealers and investors.

These shifts can seem overwhelming to a lender if they don’t partner with the right firm for their unique business needs. At MCT, we have invested in significant staffing resources to ensure that we are armed to assist lenders in this transition. We pride ourselves on our educational approach to assisting clients. We make it a priority to recruit business development and implementation staff that have deep expertise in capital markets and have actually sat in the seat that our clients do when they make the transition.

Q: How important are integrations to a lender’s secondary marketing technology?

CHRIS ANDERSON: As we know, on so many levels in the mortgage industry, it’s all about the data. It needs to be clean, accurate, and integrated.   Keeping your data in order and being in complete control over it is paramount to the digitization of whole loan trading and better hedging.  Having tight, bi-directional integrations between the pricing engine at the point-of-sale to the LOS in the back-office, and ultimately the secondary platform is vital to ensuring data integrity, compliance, profitability, and effective risk management.  Sure, good system-to-system integrations always help eliminate manual intervention, reduce costs, decrease errors, speed up processes, etc., but moreover, when using a hedging strategy, integrations are a path to achieve better hedging and greater profitability. It’s the real-time exchange of loan data that ends up creating more profitable loan sales to investors.

At MCT, we recognized the need to proactively develop integrations with leading LOS platforms. We introduced our first direct LOS integration in 2010 and have been steadily adding them ever since, and we now boast integrations with all leading platforms.


Chris Anderson thinks:

1.) The secondary marketing trend we’ve seen over the past few years will continue, with bulk bid tapes as the increasingly dominant delivery channel for whole loans to investors.

2.) Technology automation such as data write-backs will become more prevalent as the mortgage industry recognizes the need to embrace technology and leverage it to reduce manual errors and save labor costs.

3.) As rates continue to rise, we will begin to see a significant increase in non-QM loan volume, and we’ll again be in a purchase market, forcing lenders to shift their marketing strategies.


Chris Anderson is Chief Administrative Officer at Mortgage Capital Trading, Inc. (MCT) where he currently oversees the company’s Lock Desk Division, IT & Programming Division, and Business Operations Division that includes Administrative Operations, Compliance, Human Resources, and Risk Management. He has management experience in both the private and public sectors with expertise in regulatory compliance, organizational development, project management, data systems management, professional development, and public policy analysis. Notable is that in 2013 Chris successfully grew MCT’s Lock Desk Division and established it as the industry standard for outsourced lock desk services.

MCT Bolsters Its Presence With New CMO

Mortgage Capital Trading, Inc. (MCT), a mortgage hedge advisory and secondary marketing software firm, announced that Ian Miller has joined the company as Chief Marketing Officer (CMO). In this newly created position, he is responsible for ensuring that MCT’s marketing strategy effectively supports the company’s business plan and helps drive growth.

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MCT has traditionally been known in the mortgage industry as a pipeline hedge firm but over the years has developed into a fully-integrated provider of capital markets services and software. Mr. Miller is charged with developing and executing MCT’s marketing plan and strategic initiatives.  Since joining MCT, he has made significant strides in honing the company’s messaging, positioning, branding and creating positive industry awareness for MCT’s value proposition and extensive suite of secondary marketing focused products and services.

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“We are elated to have been able to recruit Ian to join the MCT team and head the marketing strategy,” said Curtis Richins, president of MCT. “We’ve grown our business considerably over the past several years and had a need to ensure that our brand accurately reflects the robust suite of products, services, and technology we now offer within company divisions. Ian has and will continue to play a key role in making sure MCT maintains a strong reputation in the mortgage industry.”

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Before MCT, Mr. Miller served as the Director of Client Services at Riverine, Inc., a full-service digital marketing firm catering to over 50 clients in a wide range of industries and capacities. At Riverine, he worked closely with MCT as a vendor partner where he was instrumental in streamlining the integration of its sales and marketing processes and enhancing the brand.

Prior to Riverine, Mr. Miller was a co-founder and partner at Tower Agency, a digital marketing firm offering end-to-end marketing capabilities. Mr. Miller eventually merged the company with Riverine, growing the client base exponentially. Before that, he was a freelance marketing agent providing professional services to an array of clients.

“Serving as MCT’s marketing provider in recent years, I have been impressed by their culture, dedication to customer service, and continuous innovation,” said Mr. Miller. “I’m grateful for the opportunity to help these qualities reach a wider audience, and support MCT’s growth as the leading provider of capital markets services and software.”

Mr. Miller is a through and through marketing professional who has a proven track record of successful execution with growing brands, capturing market share and increasing revenues. He is well-versed in all aspects of marketing communications ranging from strategic planning, branding, advertising, content marketing, and social media to trade shows, event production, sales support and client communication. He will leverage these competencies, along with support from a team of experienced professionals, to execute on a robust marketing strategy for MCT in 2018 and beyond.

Integration Offers Intelligent Best Execution Capability For Fannie Mae Sellers

Mortgage Capital Trading, Inc. (MCT), a mortgage hedge advisory and secondary marketing software firm, has released a new online functionality that automates the process of product selection and delivery of loan commitments directly to Fannie Mae for MCT’s lender clients. The new solution, which was developed as part of MCT’s ongoing technology collaboration with Fannie Mae, is called Rapid Commit and resides within MCT’s secondary marketing platform, MCTlive!.

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Fannie Mae’s Pricing & Execution – Whole Loan (PE – Whole Loan) application is a whole loan committing platform, providing ease of use, flexibility and certainty for sellers. Rapid Commit functionality retrieves pricing directly into MCTlive!, which in turn speeds up the committing process, ensures data integrity, and optimizes best execution for all commitments.

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“We developed Rapid Commit to make our customers’ entire loan commitment process with Fannie Mae more efficient, providing automated, highly accurate best execution analysis that is instant and robust,” stated Phil Rasori, COO of MCT. “Working within MCTlive!, users leverage Rapid Commit to run initial best execution and determine that the loan meets Fannie Mae selling guidelines, followed by product-specific best execution that intelligently analyzes the optimal subset sizes and products to deliver as individual commitments.”

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Last year MCT announced a new integration with Fannie Mae’s technology that delivered real-time pricing from MCTlive! for the benefit of mutual lender clients. Rapid Commit further strengthens MCT’s collaboration with Fannie Mae and advances the integration of their complementary technologies.

Mr. Rasori added, “Rapid Commit enables a Fannie Mae specific best execution within MCT’s overall robust best execution process via a bi-directional exchange of real-time data that is completely automated between MCTlive! and Fannie’s Pricing & Execution – Whole Loan web-based application. Previously, this analysis was a manual, laborious process but it is now completely automated – all with the simple click of a button. We look forward to working closely with Fannie Mae on business and technology initiatives.”

MCT Further Automates Secondary Marketing

Mortgage Capital Trading, Inc. (MCT), a hedge advisory firm and developer of MCTlive!, a secondary marketing software suite, announced that it has added a number of new features to its best execution service offering. The enhancements were done to position MCT to capture additional business among lenders. Here’s how:

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“We already enjoy great a deal of ongoing success with our existing best execution model, but the new features we developed in collaboration with our new MSR Services business unit significantly widens opportunity for MCT,” says Curtis Richins, president of MCT.  “Unlike most hedge advisory firms, MCT has always focused on maximizing loan sales value through a robust best execution analysis that considers a wide range of execution options such as mandatory, AOT,  bulk, Agency, co-issue, etc.  Our deep secondary marketing expertise and long-standing focus in this area really gives us a strong advantage that outpaces the competition and takes best execution analysis to the next level.”

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The enhanced tool is an extension of MCT’s existing best execution methodology, which is traditionally offered with its proprietary hedging services. The option to leverage the new feature set is ideal for lender clients that are interested in deepening their retain/release decisioning process and cash management concerns. It offers additional dimensions of time to payback, cash drain, corporate tax structure, subservicing terms and MSR financing possibilities, which are not available in other best execution models.

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“Lenders, especially non-bank mortgage companies, need to be acutely aware of their cash needs and balance sheet liquidity in addition to getting the best economics out of a loan sale,” said Phillip Laren, director of MSR Services at MCT.  “The enhanced best execution tool provides analytics to compute cash loss after adjusting for tax impact, months to breakeven, and any lift through MSR financing. It’s unique in that it analyzes servicing options not just from a secondary marketing perspective, but also from the financial management side of the business by considering cash spent to retain and when it may eventually be recovered.”

The model is completely customizable to actual sub-servicer costs, tax structures, and financing terms. “What if” scenarios can be set to run different scenarios to empower a CFO and secondary trader with data to determine the best decision based on economics, cash, balance sheet, and tax optimization concerns.

The enhanced best execution solution works in conjunction with MCT’s proprietary HALO hedging and loan sale program and with its award-wining capital markets platform MCTlive!

MCT formed its MSR Services Group last year after acquiring the assets of PLar Analytics, LLC and PB Pacific Partners, LLC.  MCT brought on board founder Phillip Laren to head the company’s new MSR Services Group.  The deal significantly added to MCT’s value proposition by expanding its advisory services to include specialization in mortgage servicing rights valuation.

Optimal Blue Streamlines Secondary Services

Optimal Blue Secondary Services, a provider of web-based hedging, loan allocation and best execution services to the mortgage industry, unveiled the industry’s first automated bulk bid management module. This functionality is available as a component of the Optimal Blue Secondary Services system, a platform that combines real-time market pricing with accurate investor and market eligibility content to optimize profitability and efficiency for Optimal Blue’s mortgage origination clients.

Optimal Blue Secondary Services’ technology already gives originators the tools to scrub their data for logical and eligibility errors, and obtain accurate pipeline valuations daily. In addition, they’re able to understand the factors causing their pipeline valuations to change and maximize their best execution strategy with a real-time, multiple investor, multiple commitment style best execution and loan allocation platform. The automated bulk bidding functionality further enhances this model by enabling originators to tame unwieldy bulk bidding processes that currently force inefficient and potentially inaccurate spreadsheet manipulation. Rather than rely on spreadsheets, originators can now bring bids into the Optimal Blue system, and compare them against each other and also against existing executions without having to wrestle with spreadsheets.

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“The automated bulk bid functionality enables our customers to send and receive bid files automatically, facilitating their ability to analyze multiple investor bid results and any other execution that is available to them in one, real-time best execution platform,” said Don Brown, Managing Director for Optimal Blue Secondary Services. Brown also noted that this innovative functionality expedites the bulk bidding process for Optimal Blue customers and, more importantly, ensures that these originators find their best execution every day, on every trade, and with every loan.

Patrick Ruybal, Risk Management Specialist at All Western Mortgage explained, “The most immediate impact with this new functionality is time savings. The new bulk functionality offers a clear view of a true execution within the Optimal Blue platform, allowing me to hit winning bids in a much timelier manner against market movement!”

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He continued, “Allocating loans into the different execution types is also much more efficient, and I no longer need to create individual bulk commitments for individual loans.” Ruybal now experiences a significantly simplified process of importing his spreadsheet, viewing individual loan prices and then easily allocating everything under one commitment number.

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Can The Secondary Market Hurt Mortgage Lending?

The Mortgage Bankers Association held their annual Secondary Market Conference in New York City. Much of the discussion was centered on how to revitalize the private securitization market which has not recovered to anywhere near its previous levels since the devastation caused by the mortgage market collapse. While there continues to be some activity in the jumbo market, the remainder of the conventional secondary market is almost exclusively limited to selling loans to Fannie Mae and Freddie Mac. While there are many other factors including regulatory issues and the ability to validate quality levels demanded by investors, many of the sessions and most of the networking involved how the industry could expedite the re-emergence of those investors whose appetite for mortgage loans fueled the robust market of the 2000’s.

It was therefore ironic that one of the lead stories in the New York Times on Tuesday, May 19th was entitled “Wall St. Puts Crisis Behind and Prospers”. The article discusses the fact that the Wall Street financial sector markets have fully recovered from the impact of the crisis much faster than other segments of the financial services industry and most likely faster than anyone suspected they would. Yet the article was not all good as studies concerning the size and position of the financial markets in relationship to the overall economy were not altogether supportive of the robustness that mortgage lenders are seeking.

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Of particular interest are the concerns expressed about the size of the financial sector and whether or not this quick recovery is actually a good thing. The International Monetary Fund recently released a study that concluded that the existence of large financial sectors “may actually crimp economic growth and living standards for most people.” Furthermore since financial sectors can create debt instruments which allow consumers to take on more debt leading to more frequent boom and bust cycles this rapid recovery may lead to more of the underlying issues that caused the crisis in the first place.

In addition to this, studies at the Brandeis International Business School have found that there is a relationship between the size of a country’s financial sector and the growth of productivity and determined that the larger the financial sector the smaller and weaker the growth in other sectors.

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If in fact these concerns are valid, the issues we face are not that there are few private securitizations taking place, but how will this recovery and growth impact our business. Despite the emergence of the jumbo market as a larger percentage of overall originations, the fact remains that the majority of mortgage lending is done by those other than the mega-rich. If large financial sectors detract from the overall economic growth, what does that mean to those individuals who are looking to either get into the housing market or move up to a larger home? How will this impact new housing starts and will first time-homebuyers now hesitate to make the leap to homeownership? And most important, is it time for the industry and housing policy makers to look for other options for selling and securitizing mortgage loans? The risks of losing such a critical option as Wall Street are significant and need to be addressed sooner rather than later.

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LOS Update Eyes Compliance And Productivity

With an eye on keeping their clients both complaint and more productive, Ellie Mae has updated its Encompass LOS. Encompass 15.1 was designed to ensure mortgage lenders are in compliance with the Consumer Financial Protection Bureau’s (CFPB) RESPA-TILA integrated mortgage disclosures (TRID) rule scheduled to take effect on October 3, 2015.   In addition to the new fields, forms and automation that have been added to address these new compliance requirements, the Encompass 15.1 release also includes new features for correspondent lending and secondary marketing, with specific new capabilities added to the Encompass product and pricing service.

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Encompass 15.1 includes new Loan Estimate (LE) and Closing Disclosure (CD) input forms and workflow, new Fee Itemization and Management, Disclosure Tracking handling, Fee Variance and Change of Circumstance handling to help lenders manage RESPA-TILA compliance. Encompass also enables lenders to set the date when their loans will use new 2015 RESPA-TILA forms by default. Lenders will be able to switch to the new forms for loan applications taken on or after the effective date.

Correspondent Lending Support

The new version of Encompass expands the ability to fully manage correspondent and third-party lending commitments, including commitment authority management and master commitment management. It also introduces a full solution for third-party fees and document management.

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Secondary Marketing Enhancements

Encompass 15.1 contains major new tools to enhance product and pricing and secondary marketing activities, including historical pricing, worst-case pricing scenarios and automated rate lock capabilities.

“Despite the shifting of the effective date of the new regulations, we were ready and committed to providing our lenders with our new release, which we began delivering in June, as we know that compliance with RESPA-TILA is much more than adopting new forms. Lenders need real tools and resources to make the necessary changes to the loan production process and manage third-party relationships more effectively,” said Jonathan Corr, president and CEO of Ellie Mae. “The new release of Encompass provides new capabilities using our pricing and secondary solutions along with the necessary automation and resources required for a smooth transition to a post RESPA-TILA environment. Ultimately this major new version of Encompass is enabling our customers to increase productivity and efficiency.”

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LendersOne Endorses Optimal Blue

The Lenders One Mortgage Cooperative, a national alliance of community mortgage bankers, correspondent lenders and suppliers of mortgage products and services, recently announced the selection of Optimal Blue as a new preferred vendor. Optimal Blue, a cloud-based provider of enterprise lending solutions to the mortgage industry, provides mortgage banks, community banks and credit unions the ability to navigate the complex mortgage process from capital markets, to consumers, and back.

“Lenders One is focused on delivering opportunities for our members to be innovative in the communities they originate in and with the borrowers they serve. Optimal Blue fulfills that with its highly-regarded suite of technology offerings that’s been proven to simplify the origination process for borrowers and help attract more customers,” said Jeff McGuiness, CEO of Lenders One.

Optimal Blue offers a suite of innovative services that help mortgage banks, credit unions and community banks improve efficiencies, manage compliance, reach consumers and boost secondary market performance. Consumers are looking for a new approach to the lending process according to recent study from PwC’s Experience Radar research group, which found that more than one-fourth of consumers (28%) are looking for a purely online mortgage experience. Meeting that demand is the cloud-based eOriginations platform that extends the simplification of mortgage originations to consumers through an online mortgage application experience, providing transparency and greatly reducing the time and effort required from prospective borrowers.

“Optimal Blue’s innovative technology greatly improves a lender’s ability to originate compliant mortgages efficiently, and to engage consumers who are increasingly interested in applying for mortgages online,” said Larry Huff, Co-CEO of Optimal Blue. “We look forward to working with Lenders One to help its members become more efficient, competitive, profitable, and equipped for success in today’s evolving mortgage origination market.”

The Secondary Desk: A Paradigm Shift

*Navigating A Changing Market*
**By Ivan Darius**

***The mortgage industry is undergoing a vast and dramatic shift. It’s more than regulations or investor relations; we are looking at an actual shift in the paradigm of how the mortgage product is assembled. While process management still plays an important role, we are seeing a fundamental shift towards more active management and more intense verification of data.

****Most existing “Database-of-Record” systems are not designed for this paradigm; instead they are primarily used to capture the data. But it’s not good enough to just have static, end result, data. Particularly for compliance, mortgage bankers need to understand where the information came from, what the context was when it was collected, and how it might be needed in the future. Of course, if we can all agree that data quality is the key, the questions center around when and how the data is validated. Do a simple Google search on loan data quality and more than 20 million hits are returned, most of them from vendors promoting loan quality. And what is technology’s role?

****Reading some of the articles, it’s clear that most of what is written is based on the perception of how a mortgage is underwritten and processed. In reality, it’s more about the workflow, access to information in the form of data, open systems, seamless unification of platforms, and Software-as-a-Service, or cloud-based environments that promote greater agility to be able to assemble and validate information in an automated fashion. It’s also about drawing a line between the origination process and data quality. Origination focuses on gathering facts about the consumer and the collateral, processing the data, and efficiency. Data quality and validation is (should be) done in parallel. Working symbiotically with the LOS, constructing and validating the mortgage product and loan level information in a separate system or process, that can then be merged with information in the “Database-of-Record”, ensuring a validated loan file that has minimal repurchase and compliance risk.

****For lenders, it makes sense for that parallel system to be an adaptive product-eligibility, pricing and secondary marketing automation platform. In the last few years these systems have evolved from core pricing and eligibility engines, to a much more complex platform. In the early days of PPE’s, it was a loan officer product and search tool that included basic automation of the locking process. Today, the workflow has matured adding things like automated underwriting, mandatory delivery, hedging and loan committing, consumer point of sale, investor credit overlays, etc – all things that have significantly enhanced the origination and lender workflow functionality. This information is so fundamental to creating a mortgage that it needs to be accessible from the consumer to capital markets and any point in the workflow between. By continually validating the loan level data throughout these steps, a lender is ensured that the output is a higher quality and compliant loan. Investor credit overlays are a good example. All of the above allows lenders to manage risk from the standpoint of both origination and capital markets.

****As the mortgage process evolves, and compliance grows in scope and importance, it is imperative that the industry evaluates how the market is changing and adjusts accordingly. Today, alongside LOS and servicing systems, product, pricing and secondary marketing automation platforms are equally, if not more, relevant. In the proper implementation, these platforms work hand-in-hand, creating a workflow designed to support the industry’s move towards data verification and compliance.