Nonagency platform reports jump in interest as sellers seek liquidity

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Maxex, a company that acts as a private exchange for residential mortgage sales, is seeing a pickup in activity as sellers seek additional nonagency loan outlets in a volatile market.

"Some investors are stepping away from the market and others are stepping in — not just for mortgages but credit in general. Because multiple investors are buying loans, there is constant liquidity on the platform," said Tom Pearce, chairman and CEO. Sellers find that particularly attractive now, he said.

The platform already reached the point where it got a little more traction due to its maturity in a stable market, but the recent market volatility accelerated interest in it, Pearce said. It is used by 17 buyers and has an additional 20 applying to be investors. More than 100 sellers also use the platform.

A combination of flow and bulk transactions have traded as deals with Maxex, which requires buyers and sellers to undergo a data-based due diligence process based on validated data and third-party reviews so it can act as principal in transactions.

Sellers must meet counterparty size and cash requirements roughly twice as high as those seen in the agency market to be listed on and use the platform. If sellers are strong counterparties who can fulfill requirements, it may take as little as one day to get access, said Pearce. It otherwise may take longer.

The company took measures to mitigate risks posed by the coronavirus and other contingencies, including redundant systems, remote workforce capacities and cybersecurity measures, Pearce said.

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