ICE launches service changing how lenders handle whole loans

A structured price infrastructure is coming to the residential whole loan market, prompting lenders to adapt their risk management, valuation and trading strategies.

The Intercontinental Exchange announced Wednesday the launch of Residential Whole Loan Evaluations, which extends ICE's evaluated pricing process to individual, unsecuritized loans. The service aims to fill the gap between securitized and unsecuritized markets, providing the same pricing to the whole loan market.

"Residential whole loans have long been valued through dealer bids and internal models, and lenders who hold or sell them currently have few options for an independent evaluated price," Varun Pawar, chief product officer, data services at ICE, told National Mortgage News. "This new service gives lenders and investors access to qualified and non-qualified loan evaluations through an established and trusted provider."

Whole loan buyers and lenders will no longer have to solely rely on internal valuations, and can instead use ICE's data to price individual loans. Meanwhile, lenders won't be able to command premium pricing without underlying data to support it.

The service was built on the same technology that powers ICE's evaluated bond pricing, which currently covers more than 3 million fixed-income instruments, Pawar said. It will also be overseen by a group of evaluators to deliver transparent pricing across various loan types, including qualified mortgage loans, non-qualified mortgage loans and specialty collateral. 

The methodology utilizes client provided loan information, proprietary data sets and analytics from ICE's mortgage and data service business, including its prepayment and credit model, home price index and origination numbers, according to the release.

Evaluations can be calculated at a daily or monthly frequency and delivered via secure file delivery through the ICE Data API.

"For years ICE has delivered comprehensive and transparent evaluated pricing for a broad range of financial instruments," Pawar said in a press release. "Bringing this service to the residential whole loans space provides our customers with one pricing source across different loans, and we look forward to continuing to expand into other areas within the mortgage ecosystem."

Other whole loan news

Fannie Mae announced Tuesday VRMTG ACQ was the winning bidder for its 28th Community Impact Pool of nonperforming whole loans, which included 24 loans in the Dallas area totaling $6.2 million in unpaid principal balance.

Click n' Close also expanded its Whole Loan Trading division in May. The move was part of a broader initiative to grow Click n' Close's secondary market presence and offer whole loan trading opportunities across its government and specialty loan programs.