WE’RE HEARING that one executive,
Almost “every single financial instrument traded on some type of exchange or some sort of platform,” Mullen says. So why shouldn’t mortgages be?
“At SecondaryWire we’ve created a fully functional mortgage trading platform,” he tells us, noting that this is advantageous for retail residential loan brokers as it provides them with “more liquidity.”
It also is advantageous for lenders as it provides “access to a wider sales market without physically having boots on the ground.” In addition, it results in “decreased origination time,” for wholesalers, says Mullen.
Mullen, who also goes by his middle name, Larry, says he is aware of these needs because of his professional background. He started out handling “refis and purchases,” for mortgage brokers, became a wholesale rep, and worked with bulk acquisitions for Advanta. Advanta was later bought out by Citi, and Mullen worked there briefly before moving on to work for a fixed-income securities trading system, leading him to ponder the question that started his next business venture.
“There have been similar platforms launched but they were always missing some key element I saw having come from trading system background,” he says, adding that he also finds that there is “an overall willingness and acceptance” when it comes to doing business online today that is conducive to his current venture.
Currently the system is in beta testing mode and is free, but eventually Mullen says in order to cover the costs of the vetting process he will have to charge brokers an annual fee on the order of perhaps $50 to check references and verify licenses, and charge lenders a “nominal” per seat subscription fee.
Pricing is unlikely to be transactional, as some industry vendors favor, for several reasons, one of which Mullen says is a letter of opinion from a RESPA attorney that shows paying per deal would be a concern given that “Once you are in the deal, you could be subject to [the Real Estate Settlement Procedures Act].”
Also Mullen believes subscription and annual fees give users better economies of scale as, “You don’t have increased pricing with increased business,” and he found when working for a fixed-income trading platform that Wall Street firms “hate people getting in their business” and paying a cost per trade.
“It’s been my experience that they abhor that type of pricing,” he says, noting that the platform is strictly a business-to-business venture.
“We don’t in any way want to compete with our customers we’re facilitating their business,” Mullen adds.
Although the trading system is just getting off the ground, it already has “a few lenders and a handful of brokers” signed on, and a few transactions have been done, he says.
“It is working better than I anticipated,” Mullen says, noting that the system also supports trading of closed loans and bulk loan sales.
“When the community is operable and leveraging the platform, you’ll be able to see where the market’s moving, which I think will be valuable for everyone,” he adds.
Bonnie Sinnock is managing editor of National Mortgage News and editor of Origination News. She has been covering the mortgage industry since 1995.
