Let’s start Saturday’s commentary with a piece on consumer behavior. I went to Costco this week, and… no masks! Besides no masks and a safe environment, people are anxious for many things, not the least of which is live music. Do you know what a “drip buy” is, and why Canada has banned it? There’s a reason online ticket sellers hit you with those extra fees after you’ve picked your seats and are ready to click “buy.” Pure profit! UC Berkeley Professor Steven Tadelis showed that when additional fees are only disclosed at check-out, they resulted in people spending more than those shown all-inclusive prices up front. Given that online sales have surpassed “brick and mortar” shopping, it is important. His study showed that shoppers who weren’t shown fees until checkout spent 21 percent more on tickets and were 14 percent more likely to complete a purchase compared with those who saw all-inclusive prices from the start.
Saturday Spotlight: Vaultedge, is an intelligent mortgage automation company that helps close & board more loans doing less work.
In 3-5 sentences, describe your company (when was it founded and why, what it does, where recent growth and plans for near-term future growth).
Vaultedge was founded in 2017, with offices in Texas & India. Vaultedge mortgage automation (VMA) software uses cutting edge technology like Al and Machine Learning to convert documents into data and insights.
If you ever worked in a mortgage company, you know that countless hours are spent in sorting through mortgage documents, punching data and doing stare-and-compare activities. Vaultedge Mortgage Automation (VMA) automates these activities, saving users up to 80% of manual processing time. It automatically classifies 500+ documents, extracts 2000+ fields and identifies exceptions so that users can just focus on exceptions. Companies like Ocwen-PHH, BSI Financial use our intelligent automation software to automatically process millions of documents every day.
Given the results we delivered to our customers and the interest we see from our prospects, we believe we are on target – to become the topmost intelligent automation software company for the mortgage industry in next 3 years.
Tell us about what type of volunteer work employees are encouraged to engage in, or charities your company supports, and why.
Vaultedge is committed to cause of COVID-19 relief efforts & made arrangements to supply oxygen concentrators to families of employees and their acquaintances. We also published an exhaustive collection of resources & guidelines for staying safe during COVID-19. We encourage our employees to get involved in local communities as an effort to give back to the society. Hopefully, this will inspire others too.
What does your company do to help elevate your employees’ growth? Describe any mentoring programs, outside classes or training, in-house training. How does the company help people develop?
Vaultedge mandates all its employees to undertake foundational online courses on loan production and servicing on MBA.org. Alongside this, we sponsor workshops & employee participation in industry conferences organized by MBA.Org and HousingWire. We also run a weekly newsletter and a weekly podcast to share the latest our insights on mortgage markets.
Beyond this, we let our employees make mistakes and learn from them. We make sure that they know that the “management got their back.”
Tell us how your company maintains its culture in a work-from-home environment, or how you plan on bringing employees back into the office, if applicable.
As a response to COVID-19 realities, we provided financial allowances to employees to help them set up their home workspace. We use tools like Zoom and G-Suite for real time coordination on presentations, reports, and other deliverables. Given these steps, we have been able to migrate to a work from home setting in an effortless manner.
Things you are most proud of that don’t have to do with sales.
While we do a great job in providing growth opportunities to our employees, we also take pride in providing a seamless implementation and onboarding experience to our customers. We are also proud of our software products. Many of our customers, who were skeptical due their past experience with OCR software, had a change of heart after they tried our software. By using artificial intelligence instead of OCR, we deliver accuracies of up to 99% in document processing. This sets us apart from other OCR based automation software & ensures that we deliver real results to our customers.
Fun fact about Vaultedge.
We run an ad-free weekly podcast series called Mortgage Vault Podcast. It’s amazing how much you can learn from great folks like Stan Middleman, David Lykken, etc.! You can listen to the latest episodes here.
Vendors’ bonne bouches
Software providers to residential lenders do more than make up names or capitalize letters in the middle of company names. There’s money in them thar hills! Let’s check in with who’s doing what.
Snapdocs just announced a $150 million Series D funding round at a more than $1.5 billion valuation led by Tiger Global. “With this round, we’re going to keep investing in building a digital infrastructure that connects all the parties and technologies involved in digital mortgage closings.”
Black Knight (BKI) announced an agreement to acquire Top of Mind Networks for $250mn in cash. The acquisition is expected to close in 3Q, subject to customary closing conditions and regulatory review. Top of Mind expands BKI’s product offering with its leading client relationship management and AI-driven marketing automation platform for the mortgage industry (“Surefire”).
Stavvy announced that it has raised over $40 million in Series A funding. Stavvy provides platforms to manage security risk, eliminate fragmentation, and increase speed, efficiency, and transparency in lending and banking, and will use the money to expand hiring to accelerate growth in paperless and digital solutions for banking and lending. The round was led by Morningside Technology Ventures, a private equity and venture capital investment firm based in Cambridge and Hong Kong.
Stewart Information Services Corporation (NYSE:STC), is acquiring Cloudvirga, a fintech company powering digital mortgages, adding an industry-leading customer engagement technology platform to the Stewart family. The addition of Cloudvirga strengthens Stewart’s positioning in the mortgage finance space and further enables Stewart’s ability to serve customers in all markets.
Mortgage Capital Trading®, Inc. (MCT), mortgage hedge advisory and secondary marketing software firm, announced the public launch of BAM Marketplace™. Originally designed and internally launched to support distressed sellers during the 2020 pandemic liquidity crisis, BAM Marketplace now welcomes new buyers and sellers as the world’s first truly open loan exchange between unapproved counterparties. Read the full Press Release.
Enact Holdings, Inc., formerly known as Genworth Mortgage Holdings, Inc., is introducing its new brand and visual identity. The rebrand includes a new name, visual identity, and corporate website, and reflects the Enact group of companies’ proactive and responsive approach to serving their customers.
HomeLight announced that its expanding its financial offerings, HomeLight Trade-In™ and HomeLight Cash Offer™, to top real estate agents, homebuyers, and sellers across Texas. The expansion is fueled by a $100 million credit facility from Credit Suisse, one of the world’s leading financial service providers. HomeLight Trade-In™ solves an important issue that agents and homeowners face, the ability to buy and sell at the same time, while still capturing the full market value of their home. HomeLight Cash Offer™ gives top agents and their clients the ability to make an all-cash offer on their next home, even if they need a mortgage. Agents interested in working with HomeLight should visit: www.homelight.com/agents.
Lower.com, the millennial and Gen-Z focused home buying platform, announced the launch of its mobile app featuring the new, first of its kind deposit account called “HomeFundTM.” The interest-bearing FDIC-insured deposit account is designed to help consumers make progress on their home buying journey with a dollar-for-dollar match in “HomeCashTM” rewards up to the first $1,000 saved. The account provides additional incentives in the form of bonus “HomeCash” earned through an exclusive rewards experience and a generous 0.75% Annual Percentage Yield – currently twenty-five times higher than the national deposit rate average for interest checking accounts1. To learn more, visit www.lower.com.
MISMO has made significant enhancements to the MISMO Business Glossary, an online resource of mortgage industry business terms and data point descriptions containing more than 7,000 terms and definitions and includes content from MISMO and non-MISMO sources. Read more on this topic in the MBA News.
How do you know when delinquent fees trigger an HOA lien on the property, especially in super lien states where an HOA lien takes precedence over first mortgages and any subordinate liens? See how you can protect your portfolio from HOA liens, download the Black Knight complimentary eBook: Managing HOA Risk in Super Lien States.
SOFR Agency deals
LIBOR is being phased out, and in its place are a few other floating rate securities. Many lenders are already using CMT (Constant Maturity Treasuries) for borrower’s adjustable-rate notes. Freddie and Fannie have definitely embarked down the SOFR (Secured Overnight Financing Rate) path. Let’s look at some recent deals.
Freddie Mac priced another deal (K-F108) where the class of floating rate bonds is indexed to SOFR. The approximately $937 million in K Certificates are backed by floating-rate multifamily mortgages with 10-year terms, which are SOFR-based. The K-F108 Certificates will not be rated and will include one senior principal and interest class and one interest-only class that is also entitled to static prepayment premiums. Class AS has a weighted average life of 9.44 years, a coupon of 30-day SOFR average + 25 bps and a $100.00 price.
In late 2020, Freddie Mac priced a new $961 million offering of Structured Pass-Through K Certificates (K-F92 Certificates), which includes a class of floating rate bonds indexed to the Secured Overnight Financing Rate (SOFR). The K-F92 Certificates are backed by floating-rate multifamily mortgages with 10-year terms, which are currently LIBOR-based. K-F92 includes one class (Class AL: $461.069 million, coupon of 1-month LIBOR+33 bps) of senior bonds indexed to LIBOR and another class (Class AS: $500.000 million, coupon of 30-day SOFR average+36 bps) of senior bonds indexed to SOFR. Both classes have weighted average lives of 9.56 years and $100.00 prices. Freddie Mac will provide a basis risk guarantee on Class AS that covers any floating interest rate basis risk if the value of SOFR exceeds the value of LIBOR. The K-F92 Certificates settled on November 24.
Then Freddie Mac announced that its latest $991.5 million offering of Structured Pass-Through K Certificates (K-F95 Certificates) will include classes of floating rate bonds indexed to the Secured Overnight Financing Rate (SOFR) and backed by underlying mortgages that are also indexed to SOFR. The offering is the first of its kind as all past SOFR-based K-Deal floating rate bonds were backed by LIBOR-based underlying mortgages. K-F95 will also include classes of floating-rate bonds indexed to LIBOR and backed by underlying mortgages that are indexed to LIBOR. Freddie Mac Multifamily began purchasing SOFR based floating rate mortgages in October 2020 and will cease all LIBOR-indexed loan purchases by the end of the year. Once all LIBOR-indexed loans purchased by year end 2020 have been securitized, floating rate K Certificates will include only SOFR-indexed bond classes. Freddie Mac Multifamily is a leading issuer of agency-guaranteed structured multifamily securities. K-Deals are part of the company’s business strategy to transfer a portion of the risk of losses away from taxpayers and to private investors who purchase the unguaranteed subordinate bonds.
And Freddie Mac priced a new $940 million offering of Structured Pass-Through K Certificates (K-F91 Certificates), which includes a class of floating rate bonds indexed to the Secured Overnight Financing Rate (SOFR). The K-F91 Certificates are backed by floating-rate multifamily mortgages with 10-year terms, which are currently LIBOR-based. K-F91 includes one class (Class AL – $540.175 million, coupon of 1-month LIBOR+33 bps) of senior bonds indexed to LIBOR and another class (Class AS – $400.000 million, coupon of 30-day SOFR average+38 bps) of senior bonds indexed to SOFR. Both classes have a weighted average life of 9.53 years and a $100.00 price. Freddie Mac will provide a basis risk guarantee on Class AS that covers any floating interest rate basis risk if the value of SOFR exceeds the value of LIBOR. The K-F91 Certificates settled on November 13. The K-F91 preliminary offering circular supplement can be found here.
Freddie Mac also priced a new offering of Structured Pass-Through K Certificates (K-F93 Certificates), which includes a class of floating rate bonds indexed to the Secured Overnight Financing Rate (SOFR). The K-F93 Certificates are backed by floating-rate multifamily mortgages with 7-year terms, which are currently LIBOR-based. K-F93 includes one class (Class AL: $491.564 million, 1-month LIBOR+28 bps coupon) of senior bonds indexed to LIBOR and another class (Class AS: $400.000 million, 30-day SOFR average+31 bps coupon) of senior bonds indexed to SOFR. Both classes have weighted average lives of 6.63 years and $100.00 prices. Freddie Mac will provide a basis risk guarantee on Class AS that covers any floating interest rate basis risk if the value of SOFR exceeds the value of LIBOR. The approximately $891 million in K Certificates (K-F93 Certificates) settled on December 3, 2020.
Saturday morning I got up early, quietly dressed, made my lunch, and slipped quietly into the garage. I hooked up the boat up to the van and proceeded to back out into a torrential downpour. The wind was blowing 50mph, so I pulled back into the garage, turned on the radio, and discovered that the weather would be bad all day.
I went back into the house, quietly undressed, and slipped back into bed. I cuddled up to my wife’s back. now with a different anticipation, and whispered, “The weather out there is terrible.”
My loving wife of 5 years replied, “And can you believe my stupid husband is out fishing in that?”
And that’s how the fight started.
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