Regional Bank Connects
with National Mortgage Lenders to Buy Scratch-and-Dent Loans
Brought to you by Promontory Interfinancial Network, Residential Mortgage Network helps financial institutions expand their residential mortgage opportunities by developing relationships between buyers and sellers. Residential Mortgage Network’s pool of potential buyers and sellers of mortgage whole loans, coupled with its team of experienced mortgage professionals, helps banks to locate assets they otherwise might have difficulty finding. A recent connection between a regional bank on the East Coast and two national residential lenders demonstrates how institutions have experienced success using Residential Mortgage Network.
Two national mortgage lenders that originate and sell residential whole loans were looking for buyers of their “scratch-and-dent” loans. Scratch-and-dent loans are loans that fall outside of the Agency (Freddie Mac and Fannie Mae) underwriting guidelines, perhaps due to deficiencies in loan documentation, irregular payment history, and/or a default by the borrower. Although the mortgage lenders believed these loans were still attractive assets, they were unable to sell these loans through their regular channel.
Meanwhile, an East Coast bank was searching for residential loan growth at yields above the current Agency levels. The Residential Mortgage Network’s team contacted the bank about the above-mentioned scratch-and-dent loans based on knowledge of the purchase criteria the bank had defined.
Residential Mortgage Network’s team of professionals saw an opportunity for all the parties involved and connected the regional bank on the East Coast and the two mortgage lenders. Once connected, the regional bank determined that the loans originated by the residential lenders fit within its investment parameters. From the start of due diligence to deal completion, these two transactions took less than a month.
The Power of Connection
The Residential Mortgage Network team was successful in helping the mortgage lenders find a buyer, freeing them up to focus on their standard business of originating residential loans. The Residential Mortgage team helped the East Coast regional bank identify loans the bank sought as part of its growth strategy. Going forward, the regional bank now has another channel to a supply of loan pools from multiple national mortgage lenders that it did not have prior to discovering the Residential Mortgage Network.
Benefits to Participants
- Access newly originated inventory to purchase in secondary market transactions from top national originators and aggregators of residential mortgages.
- Customize your experience and receive updates when Residential Mortgage Network receives mortgage pools that meet your buying criteria.
- Discover more opportunities to purchase pools of seasoned mortgages from investment funds, banks, and mortgage originators.
- Choose mortgage pools consistent with your bank’s asset goals, including its CRA requirements.
- Tap into an active buyer community that includes mortgage companies, nonbank lenders, mortgage investors, funds, and banks.
- Save time and resources with the ability to access predetermined buyer criteria and originate loan pools accordingly.
- Choose to receive buy-side inquiries from motivated buyers, or send your loan tape to the Residential Mortgage Network team so that they can perform prospecting on your behalf.
- Connect with national mortgage firms and banks that buy residential mortgage loans in the secondary market, on a delegated or non-delegated correspondent basis, to expand your product offerings or decrease back-office costs.