On-line mortgage trading system makes debut.
Through this unique industry innovation, the IMX service enables lenders to search for, bid on, and purchase loans from brokers in multiple markets through on-line extranet technology. This will allow better control over production volume and quality, product offerings, and implementation of risk-adjusted pricing strategies, the company says.
IMX MatchMaker System was developed to facilitate the real-time selection, placement and trading of home mortgages between originators and investors. The service began a pilot operation in California on September 24th with over 300 brokers and 20 wholesale mortgage-lending companies. A variety of loans are being traded, including jumbos, affordable housing, conforming, FHA/VA, and sub-prime.
The system was exhibited before a national audience at this year's 84th annual Mortgage Bankers Association (MBA) meeting in New York held last week.
Stephen Fraser, founder and executive vice president of IMX, said "We developed a procurement system that will significantly change how loans are bought and sold in the mortgage industry. Not only does it help lenders efficiently fill and strategically build loan pools, it enables them to move into new geographic markets using a virtual branch network. The IMX service empowers lenders to query and use search criteria such as credit scoring and loan-to-value (LTV) ratios for selecting the most appropriate loans for their portfolios. This mortgage exchange can significantly reduce the average loan procurement cost."
According to Mark Korell, president and CEO of IMX, the industry will benefit from an industry-neutral, electronic trading arena. The identity of the brokers and wholesalers are not disclosed until a bid is submitted and accepted, A bid includes program requirements, rate, points, foes, lock period and delivery instructions. Originating brokers are notified of the bid via e-mail or alphanumeric pager.
Jeff Lebowitz, a partner in SSP Associates and noted mortgage technology expert, said "Single family mortgages are becoming commodity-like. As a result, yield spreads are coming under serious pressure. To accommodate, the industry will be required to restructure loan production channels to squeeze out deeply imbedded inefficiencies. Despite experimentation, loan production hasn't really changed in 25 years."
Mortgage Insurance Partners
PMI and MGIC have been selected by IMX to provide contract underwriting, pre-approval and loan scoring reviews in con.junction with originators. "These partnerships will create greater convenience and liquidity for originators and lenders using the IMX MatchMaker System," Korell said. "We are delighted to have two of the strongest and most innovative mortgage insurance firms as strategic partners."
Curt Culver, president of MGIC, said "We see the innovative IMX system as a new generation of technology for reducing the cost and time involved in the mortgage lending business."
W. Roger Haughton, president and CEO of PMI Mortgage Insurance Co., said "We applaud IMX for its leadership position and for sharing PMI's commitment to give lenders new and sophisticated technological tools for realizing today's full range of market opportunities."
Risk Adjusted Pricing
MatchMaker was designed to pair lenders with high-quality loan products. Risk adjusted pricing is a key advantage to using the system and allows lenders to bid on loans based on their own pre-defined risk parameters.
Lenders can combine over 30 variables to custom tailor their bids. One of MatchMaker's features is its real time bond market feed, which gives lenders on-line notification of activities in the market that may impact their bidding strategies. Lenders will also be able to obtain real-time price data where various loans are trading.
MatchMaker Can Assist in CRA and HMDA Lending
The IMX system can also be used to identify loans to fulfill a lender's affordable housing commitments. The MatchMaker System lets lenders specify and select loans based on Metropolitan Statistical Area (MSA) information or census tract, thereby assisting lenders to meet Community Reinvestment Act requirements. In addition to MSA and census tract, lenders can select loans by querying the IMX database for conforming, jumbo, LTV, county, state, median income level, credit score, debt ratios, property type, and transaction type information.
According to Korell, the former CEO of Norwest Mortgage, "I can attest to the challenges and added expense associated with acquiring loans to fill affordable housing obligations. I suspect wholesalers will quickly realize how the MatchMaker System is a tremendous tool for helping them meet or exceed their affordable lending goals."
Brokers and wholesalers, using a standard PC/Windows 95 configuration, can access the IMX trading arena through the IBM Global Network system, known for its state-of-the-art security and reliability.
Robbie Mihalyi, vice president of Engineering and Operations of IMX, said "To win user acceptance, the MatchMaker was developed on a secure and highly reliable framework. We are very pleased to have IBM as a strategic business partner, and the IBM Global Network matches our requirements for security and high-availability, and provides the required access speed and capacity to create a mission critical system for our users."
Only Professional Originators Can Access MatchMaker
Only licensed originators are allowed to use the MatchMaker System, which is offered without a membership fee at present. To help insure third-party origination quality, IMX completes a thorough due diligence process on each broker and originator before they are approved to use the system. Wholesalers can deselect any third-party originator that doesn't meet their own quality control standards or if they are viewed as an unacceptable source.
IMX was founded in 1996 and is privately owned. It has received funding from two prominent and highly successful venture capital companies, Hummer Winblad Venture Partners and Mohr, Davidow Ventures. Both are located in the San Francisco Bay area. The company welcomes all qualifying loan originators and lenders to participate on the IMX MatchMaker System to improve the efficiency of the residential loan origination process.
For more information on IMX Mortgage Exchange, contact Brandie Young at (510) 552-3343 or e-mail at email@example.com. IMX Mortgage Exchange is headquartered at 111 Deerwood Road, Suite 220, San Ramon, CA 94583.
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|Publication:||Real Estate Weekly|
|Date:||Oct 22, 1997|
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