The Briefing Room Getting a Handle on Residential Mortgage Loans
Getting a Handle on Residential Mortgage Loans
Aug 02, 2015
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The Briefing Room
Getting a Handle on Residential Mortgage Loans
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The Briefing Room
! Reveal the essential characteristics of enterprise software, good and bad
! Provide a forum for detailed analysis of today’s innovative technologies
! Give vendors a chance to explain their product to savvy analysts
! Allow audience members to pose serious questions... and get answers!
Mission
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The Briefing Room
Residential Mortgage Loans
And lots more…
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The Briefing Room
Analyst: Robin Bloor
Robin Bloor is Chief Analyst at The Bloor Group
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The Briefing Room
ELM Systems, LLC
And lots more…
! ELM Systems LLC develops loan management solutions
! The Enterprise Loan Management System (ELMS) is designed for institutions and funds that hold and manage residential whole loans
! C&A Strategic Advisors is the managing partner of ELM Systems
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The Briefing Room
Guests
BARBARA CHELL
MATT MUSTICH
Principal C&A Consulting, LLC
Senior Vice President ELM Systems, LLC
Barbara is currently a Principal at C&A Consulting, LLC responsible for their Residential Mortgage practice as well as a Director at ELM Systems, LLC where she is responsible for Product Management. Barbara has 25+ years of experience in commercial and residential lending. She has held senior positions in finance, operations, processing, servicing oversight and risk reporting.
Matthew is currently a Senior Vice President at ELM Systems, LLC with his focus being on Business Development. Matthew has 10 years experience in the residential whole loan markets with extensive experience in the trading, pricing and managing of residential loan inventories for both performing and non-performing portfolios.
Enterprise Loan Management System (ELMS)���
✤ Due Diligence !
✤ Loan Servicing !
✤ Performance Tracking !
✤ Strategy Management !
Enterprise Loan Management System ���
✤ ELMS was initially used by a privately-held entity to bid, manage, and securitize residential mortgages. The system managed upwards of 10 million loans.
✤ There is a market need for an enterprise-level residential loan management system to allow investors to track inventory performance, create strats, and extract pertinent data into an external repository for accurate accounting.!
✤ The software is currently offered as a standalone package installed by our technology team in conjunction with client staff.!
History !
Enterprise Loan Management System ���
The Enterprise Loan Management System (ELMS) is an advanced and flexible solution to managing residential mortgage loan inventories from acquisition through disposition. It allows you to:
✤ Bid on loans either individually or in packages!
✤ Create loan sets for securitization or package sale!
✤ Manage Due Diligence results!
✤ Track loan performance!
✤ Track servicing information through REO!
✤ Create user-defined calculation for information tracking!
✤ Track collateral!
✤ Filter and strat!
✤ Create reporting extracts via Excel !
Life of a Loan���Acquisition to Disposition !
Tape Loading ���Selecting a Loan Tape !
Tape Loading���Preview Input !
Tape Loading ���Mapping Columns!
Tape Loading���Translations!
Tape Loading���Loan Validation !
Tape Loading���Loading!
Loan Management ���Loan Package Manager!
Loan Management���Package Shrinking !
Data Mining���Filters!
Data Mining ���Stratifications !
Due Diligence ���
✤ Easily customizable due diligence views, in the providers desired format
✤ Export the data set to Excel
✤ Due diligence results are uploaded to ELMS using the Load Package Wizard
✤ Specific due diligence fields are updated and the results can be compared to the bid / seDle data
Servicing���Maintain Servicers !
Servicing���Servicing Transferring!
Servicing���
✤ Easily customizable servicer views, in the servicers desired format
✤ Export the data set to Excel
✤ Servicing results are uploaded to ELMS using the Load Package Wizard
✤ Specific servicing fields are updated and the results can be compared to the original data
Disposition���Deals and Pools for sale !
Permissions & Controls���Role & Permission manager!
Permissions & Controls���Loan History Report !
Permissions & Controls���Data Dictionary !
Thank you and for further information, contact us at:!
Or visit us at www.elm-systems.com!!
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The Briefing Room
Perceptions & Questions
Analyst: Robin Bloor
The Bloor Group
The Bloor Group
NINJA Loans
NINJA Loan: NINJA = No Income No Job or Assets
Why would any sane person make a mortgage
loan to a NINJA?
Ø Because they could probably pay the first year’s premiums – so the loans were structured accordingly
Ø Because the property market was booming and the rise in house prices might just eliminate the risk
Ø Because you could pass on the risk
The Bloor Group
The Mortgage Backed Security Mortgage Backed Securities:
Bundled the NINJA Loans with others en block (risk spreading)
Were traded without adequate transfer of title
Were falsely rated – often AAA
Were a primary cause of the 2008 crash
WE ARE STILL SORTING OUT THE MESS
and
The Bloor Group
A Systemic Failure
Caused in some instances by “bad actors”
Assisted by inadequate
systems without proper audit trails
Economic impacts (which were severe)
Severe legal and administrative
impacts
The Bloor Group
A Systemic Failure
Caused in some instances by “bad actors”
Assisted by inadequate
systems without proper audit trails
Economic impacts (which were severe)
Severe legal and administrative
impacts
FAIL
The Bloor Group
And So…
Ø Provide transparent loan level data
Ø Expose the actual risks in a clear and comprehensible manner
Ø Enable the intelligent management and monitoring of loan performance
Perhaps we should have RELIABLE
loan management systems which:
The Bloor Group
1. The failure of Mortgage Backed Securities was clearly in part due to poor systems. Given that it was not the only cause please explain how your application suite:
! Provides more coherent loan level due diligence reviews
! Accurately exposes the level of risk
! Includes customer specific loan level validations at bid and settlement
Questions
The Bloor Group
2. How does the application deal with taking on existing loans (some of which may be under water)?
3. Imagine the situation where, in the future, house prices fall in a dramatic way (say 30% on average):
! Could your application suite be used to identify these loans for monitoring and performance tracking?
Questions
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The Briefing Room
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The Briefing Room
Thank You for Your
Attention
www.insideanalysis.com
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