Mortgage Capital Trading Inc. is incorporating the company’s patent-pending geocoding technology into its Bid Auction Manager whole loan trading platform in order to shield borrower addresses from being shared with non-buying entities throughout the whole loan bidding process.

“Concealing borrower addresses for whole loan bids is the most recent step that MCT is taking to heighten data security while protecting borrowers and lenders,” stated Phil Rasori, COO and head trader at MCT. “We estimate that upwards of 90 percent of all secondary marketing transactions expose borrower addresses to non-buying bidders. The only investor that should eventually see the property address is the one that wins the loan. MCT's proprietary BAM Geocoder enables investors to price LMI-CRA incentives without the address.”

Historically, only a handful of non-identifying data points were used to determine loan pricing in the secondary market. However, the advent of Community Reinvestment Act requirements and spec pay-ups combined with the rapid adoption of delivery via bid tapes resulted in the full property address being disclosed to bidders in the majority of transactions executed over the last several years.

While clear contract terms typically govern borrower data usage for the whole loan buyer and seller, they generally fail to address the non-buying bidders, according to a review of MCT’s lender clients. This can be a sensitive area for some parties, in particular for EPO (early pay off) and servicing pre-payments, as refinancing terms do not take into account safeguards for borrower loan data during the bidding process.

Mr. Rasori added, “Ensuring that our systems and processes are as secure as possible is always of the highest importance. We are confident that this new level of protection will become the standard in the near future, and we’re proud to lead the industry in this direction.”

Notable is that MCT recently implemented multi-factor authentication security protocols into its MCTlive capital markets software, requiring multiple methods to verify a user’s identity for logins and transactions. In July of 2017, MCT officially rolled out its award-winning BAM platform, in part, to migrate sensitive borrower data contained in bid tapes off of email to a centralized, secure platform.

Company officials at MCT say that the geocode-enabled conversion process has already begun with investors; addresses will be completely removed from all MCT bid tapes by 2019. The proprietary BAM

Geocoder is patent-pending and available for license to third-parties interested in increasing transaction security.

Mortgage credit availability increased in October according to the Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association which analyzes data from Ellie Mae’s AllRegs® Market Clarity® business information tool.

The MCAI increased 2.5 percent to 186.7 in October. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012. The Conventional MCAI increased (up 5.5 percent) and the Government MCAI decreased (down 0.4 percent). Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 6.3 percent while the Conforming MCAI increased by 4.6 percent.

“Credit availability increased in October, driven largely by an expansion in the supply of conventional credit, while government credit fell slightly over the month,” said Joel Kan, MBA's associate vice president of economic and industry forecasting. “Reversing a trend from last month, lenders made more conventional and low down payment programs available to prospective borrowers. This increase in supply was likely in response to a growing number of first-time home buyers in the market, as home price appreciation has slowed and wage growth has picked up. Jumbo credit availability also expanded last month, with the jumbo index increasing again to its highest level since the survey began.”

The MCAI increased 2.5 percent to 186.7 in October. The Conventional MCAI increased (5.5 percent) and the Government MCAI decreased (0.4 percent). Of the component indices of the Conventional MCAI, the Jumbo MCAI increased (6.3 percent), while the Conforming MCAI increased (4.6 percent).

The Conventional, Government, Conforming, and Jumbo MCAIs are constructed using the same methodology as the Total MCAI and are designed to show relative credit risk/availability for their respective index. The primary difference between the total MCAI and the Component Indices are the population of loan programs which they examine. The Government MCAI examines FHA/VA/USDA loan programs, while the Conventional MCAI examines non-government loan programs. The Jumbo and Conforming MCAIs are a subset of the conventional MCAI and do not include FHA, VA, or USDA loan offerings. The Jumbo MCAI examines conventional programs outside conforming loan limits while the Conforming MCAI examines conventional loan programs that fall under conforming loan limits.

The Conforming and Jumbo indices have the same “base levels” as the Total MCAI (March 2012=100), while the Conventional and Government indices have adjusted “base levels” in March 2012. MBA calibrated the Conventional and Government indices to better represent where each index might fall in March 2012 (the “base period”) relative to the Total=100 benchmark.

The Total MCAI has an expanded historical series which gives perspective on credit availability going back approximately 10-years (expanded historical series does not include Conventional, Government, Conforming, or Jumbo MCAI). The expanded historical series covers 2004 through 2010, and was created to provide historical context to the current series by showing how credit availability has changed over the last 10 years – this includes the housing crisis and ensuing recession. Data prior to March 31, 2011, was generated using less frequent and less complete data measured at 6-month intervals and interpolated in the months between for charting purposes. Methodology on the expanded historical series from 2004 to 2010 has not been updated.

Data prior to 3/31/2011 was generated using less frequent and less complete data measured at 6-month intervals interpolated in the months between for charting purposes.

The MCAI provides the only standardized quantitative index that is solely focused on mortgage credit.

The MCAI is calculated using several factors related to borrower eligibility (credit score, loan type, loan-to-value ratio, etc.). These metrics and underwriting criteria for over 95 lenders/investors are combined by MBA using data made available via the AllRegs® Market Clarity® product and a proprietary formula derived by MBA to calculate the MCAI, a summary measure which indicates the availability of mortgage credit at a point in time. Base period and values for total index is March 31, 2012=100; Conventional March 31, 2012=73.5; Government March 31, 2012=183.5.

The MBA updated its methodology in August 2016 which produced an updated set of index values (historically and moving forward), for more information on this updated methodology please visit www.mba.org/MortgageCredit and read the FAQ and Methodology documents. Any historical data obtained prior to August 2016 is not comparable to the current, revised index and should be replaced with the new history.

Mortgage Capital Trading Inc. plans to launch of MSRlive!, a powerful web-based platform designed to effectively support lenders’ efforts to build, maintain and optimize their servicing portfolios. The solution will be officially released at the IMN’s first annual Residential Mortgage Servicing Rights Forum in Los Angeles on November 5. Interested parties can join an upcoming MSRlive! webinar that will be held on November 15 for additional information.

MSRlive! delivers highly accurate pricing for servicing portfolio valuations by automatically evaluating scenarios using more than 400 different factors that are fully customizable based on lender preferences. It was designed to be straightforward and easy to learn, simple to run (without the help of IT) and provide robust analysis. Detailed reports are also easily created, establishing the best possible servicing model for lenders’ specific business needs. Users are able to effectively forecast and manage their portfolios, predicting the impact of market shifts.

“We developed MSRlive! to put our clients in the driver’s seat to value their servicing portfolios and run customizable future market scenarios,” stated Phil Laren, Director of MSR Services at MCT. “Using a sophisticated model and technology platform, we are able to drastically increase the speed and accuracy of MSR portfolio valuations. MSRlive! is the mortgage industry’s most detailed and accurate servicing portfolio valuation solution on the market.”

MSRlive! is supported by an experienced team of MCT specialists that are dedicated solely to its MSR Services Division. MCT’s MSR experts work with clients to define and understand all base assumptions; clients have the ability to easily upload their data and run at their discretion; users are able to create various sets of reports that are easily generated (e.g. cash flow forecasting, accounting, portfolio analysis, etc.); and the results can then be viewed to make intelligent, actionable decisions that mitigate risk. Servicing portfolios are analyzed and valued at over 30 loans per second in great detail – and with unmatched accuracy.

Key MSRlive! Features:

• Over 400 inputs establishes unparalleled accuracy plus the ability to edit them.
• Cash flow analysis to help clients effectively evaluate future cash flow.
• Standard reporting features use daily market rates and make it easy to edit most frequent inputs.
•  Grid pricing can be integrated with most pricing engines and can be updated as often as needed.
• Rate shock analysis of 200 basis points in either direction prepares clients for unseen market changes.

MCT’s MSR Services Division also offers additional services that include portfolio valuation reports, enhanced retain-release extension, MSR strategy consulting, custom MSR Grids, and MSR hedging and brokerage services.

MCT will be available to answer questions regarding MSRlive! at the IMN’s Residential Mortgage Servicing Rights Forum in Los Angeles on November 5–6. In addition, MCT’s Phil Laren will be speaking on a panel on Monday, November 5 at 4:40 p.m. entitled ‘The Pre-Hedging Decisions For Origination Hedgers.’