The historic mortgage boom spurred by the pandemic hasn’t just been a blessing for lenders – the slew of mortgage loan-trading platforms have also reaped the rewards of historic origination volume. But new regulatory actions and rising interest rates threaten to cut the party short if they can’t adapt.
The companies behind these platforms – ranging from stalwarts like Black Knight and MCT, to startups such as Maxex and Maxwell – essentially connect lenders and investors, and also match them with critical services such as paper standardization and due diligence. On these platforms, originators can lock down the best loan price from various buyers, typically asset managers and institutional investors.
“In 2021, we’ve had a record volume. The last 12 months have been great,” said Tom Pearce, CEO of Maxex, an Atlanta-based fintech company founded in 2016.
Maxex claims an average of $1 billion per month is traded on its platform, which is focused primarily on residential non-agency jumbo loans. Loans traded through the exchange comprised approximately 10% of all jumbo securitization over the past 12 months, the company said.
Roughly 60% of mortgages are packaged and sold to investors, while the remaining is held in clients’ portfolios. Since 2016, the loans traded through the platform have been involved in 94 securitization deals.
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