“We’re building an online platform within that space to help connect secondary loan traders,” said Steve Schipper, the Des Moines, Iowa-based founder and CEO of the company, who said he plans to have the technology ready for demonstration at the Mortgage Bankers Association annual conference.
Private-label whole loan sales haven’t quite been what they were since the crisis, and buyers and sellers in that market need a way to connect for trades that have more to do with relationship-building than quick business exchanges, he said, noting also that online, mobile-based social media communication is used more commonly today.
“People are connecting differently than before the secondary market fell apart,” said Schipper, who describes himself as a longtime loan trader with experience as a buyer, seller and middle man.
“I think the timing is good for this,” he said, noting the uptick in rates this year and contraction in originations that have spurred some bank interest in buying for their balance sheets, as well as uncertainty associated with the government-sponsored enterprises’ role in the market.
Some other loan trading platforms also have launched recently, like FNC’s MortgageTrade and SecondaryWire, but Schipper said his is different as the buying and selling is conducted largely outside LendTrade, with the platform designed only to help users make match their buying and/or selling needs efficiently and serve as a social media business network.
“The real value of the system is the matching,” he said, noting that the company provides to every level of user a “trade compatibility score” which shows how well aligned different users’ objectives are. “We’re going to filter out the opportunities that might not be a fit.”
The score rates on a scale of 1-100 how well-matched a trade is, based on underwriting-related questions Schipper said take about five to seven minutes to answer, such as whether the loans the user wants to sell or buy are servicing-retained or released, and what the credit score preferences involved are.
Users who pay a premium for a higher level of service also get a gap analysis so that they get not just the feedback from the score but more specific information about where the mismatches occur, such as a situation where the buyer is interested in credit score range and the seller is not.
Premium members pay $150 month and can post an unlimited number of “opportunities” in terms of loans for sale or the type of loans they are looking to buy, and connect with as many users as they want. The other option is to sign up, create a profile and connect to up to three people for free, but then pay $95 per connection.