MAXEX Chairman & CEO Tom Pearce shared this letter below with MAXEX customers to update them on the progress we have made throughout the COVID-19 crisis.
MAXEX Exchange Participants,
I hope that each of you are safe and healthy as we continue to navigate the challenge of COVID-19. While the past five months have been trying for many, I could not be more optimistic about the industry and our future together. There is much to be excited about at MAXEX. I would like to share with you a few updates on our business, including some new developments to come throughout the remainder of 2020.
MAXEX was founded to address many of the root causes of the 2008 Financial Crisis, reduce friction and provide consistent liquidity to the mortgage markets. While no one expected the deep and rapid economic pain brought on by COVID-19, this crisis has served as an important test of the durability and value of our business model.
Unlike the government-supported agency market, the non-agency market was deeply impacted by an abrupt shortfall in liquidity in late March and April. However, unlike 2008, MAXEX stepped in to play a vital role. First, we kept buyers in the market and settled all pipeline commitments, even as established investors outside our exchange left the market entirely and, in some cases, refused to settle on their committed pipelines. Additionally, we worked with each exchange participant to create new standards around forbearance and early payment defaults that provided much needed certainty and ensured the consistent flow of liquidity. Through it all, MAXEX has not had a single day during this crisis where we did not deliver pricing, accept new locks and honor pipeline commitments.
The industry has taken notice. Our marketplace has grown throughout the crisis: more than 140 financial institutions have now executed MAXEX’s standardized legal agreement—a market first. Together, we have achieved over $8 billion in lock trading volume, including record volume in August. Additionally, loans traded through our exchange have now been securitized in more than 50 PLMBS transactions—another market first. Our diversified buyer base includes a growing number of Wall Street banks, regional banks, REITs and insurance companies, and pricing on the exchange continues to strengthen as a result. Finally, we are increasing our breadth of programs—such as the recent re-introduction of Jumbo Express.
As we look ahead to the remainder of 2020, I am personally excited about several new initiatives that will help you to continue to grow your business with fast, consistent liquidity from a trusted partner, including:
We are actively expanding our loan programs, building on the strength of our traditional Jumbo and Conforming offerings and expanding into other non-agency programs such as Non-QM and CRA. We are also excited to report that we are now approved as a direct seller to Fannie Mae and will be expanding our Conforming loan program.
The mortgage market is transforming itself from analog to digital, and MAXEX is positioning itself to be an invaluable partner as this evolution occurs. We have begun building the next generation of our LoanExchange trading platform, which will take advantage of this transformation and offer a faster, more seamless experience and enable us to more quickly deliver enhanced functionality. We will provide more information on this effort later this year.
We have expanded our seasoned bulk portfolio trading service, which delivers better execution with a more efficient, turnkey solution, both on a servicing retained and released basis. To date, MAXEX has already settled more than $1 billion in bulk trades with some of the largest U.S. banks.
We are working with several of our exchange participants to develop the industry’s first non-agency flow-loan servicing retained offering, which we expect to launch before the end of this year. This capability will allow banks and credit unions to expand their product mix and offer a broader array of high-demand loan products to their borrowers. We will do this while staying true to MAXEX’s business model of a single counterparty and single legal contract.
This is just the beginning. Our management team, our buyers and MAXEX’s investors—many of whom are marketplace participants—are energized by the important validation of our platform during the COVID-19 crisis. We are even more excited about this next step in our journey together and want to thank all of our loyal customers for your continued confidence and support.
Sincerely,
Tom Pearce
Chairman and CEO
MAXEX
