MAXEX, the first digital mortgage exchange to enable the trading of residential loans through a single clearinghouse, announced it secured a strategic investment from J.P. Morgan (NYSE: JPM), with participation from existing MAXEX investors AGNC Ventures and Moore Asset Backed Fund, LP. The investment is intended to accelerate broad market adoption of the MAXEX exchange platform for buying and selling loans in the U.S. non-agency mortgage market. Terms of the investment were not disclosed.
The strategic investment by J.P. Morgan follows a year of record growth for MAXEX. The company more than tripled its volume from 2019 and—as of March 31, 2021—has exceeded $20 billion in aggregate trade lock volume since launching the platform.
“We’re excited to make a strategic investment in MAXEX as they bring standardization to an otherwise fragmented sector of the residential mortgage market,” said Marc Simpson Managing Director, Head of Non-Agency Whole Loan and RMBS Trading, J.P. Morgan. “We are eager to see continued growth at MAXEX as they build a more liquid marketplace for trading mortgage loans.”
MAXEX is a leading liquidity provider for non-agency home mortgage loans, with its technology platform being utilized by leading industry lenders and institutional investors to greatly reduce the friction costs and risks associated with acquiring, securitizing and selling mortgage loans. Over 200 financial institutions nationwide have executed the company’s proprietary standardized contracts to trade on the exchange.
“In addition to the strategic investment from J.P. Morgan, we’ve created an equity incentive model designed to encourage co-investments in MAXEX from other buyers on the platform and motivate these buyers to trade through the exchange, which creates greater liquidity for our sellers,” said MAXEX Chairman & CEO Tom Pearce. “This consortium model is consistent with the way other leading fixed income marketplaces have achieved broad market adoption.”
“MAXEX solves a number of problems that have plagued the mortgage secondary market for decades,” said MAXEX Advisory Board member Blythe Masters, a leading fintech executive, board director at Credit Suisse and digital banking pioneer. “The mortgage industry is pouring billions of dollars into digitizing the front end of the mortgage experience for consumers and lenders. In contrast, MAXEX is uniquely focused on the standardization and efficient intermediation needed to provide liquidity to lenders and efficiencies for investors. It is this back end of the market where untapped opportunities for digitization and growth still exist.”
“As a minority-owned mortgage lender actively selling loans on the MAXEX platform, our company and the homeowners we serve have already benefited greatly from MAXEX’s unique ESG lending programs,” said James Jin, CEO of General Mortgage Capital Corporation, based in Burlingame, California. “MAXEX levels the playing field for small and mid-sized community lenders like GMCC and enables us to consistently access optimal market liquidity that was previously only available to the largest industry players.”