MAXEX extends loan-trading reach with DSCR program

The mortgage exchange is looking to capitalize on the expanding demand for investment-property loans

Digital-mortgage exchange and loan aggregator MAXEX is launching a new loan-purchasing program for originators looking to tap into the growing mortgage demand from individual and small-business real estate investors.

The exchange is unveiling a flexible DSCR [debt-service coverage ratio] loan-purchasing program designed to serve real estate investors, such as rental property owners, who “tend to prioritize property cash flow over interest rate,” MAXEX said in announcing the initiative. 

The new DSCR program offers flexible loan-purchase limits, from $150,000 to $2 million; a single set of guidelines; lock periods of up to 90 days; and multiple ways to trade the loans — including on a flow, forward or bulk basis.

In addition, MAXEX, based in Atlanta, announced that it is expanding its bulk- and forward-trading loan programs. 

“By introducing a new DSCR program and expanding bulk- and forward-trading capabilities, MAXEX will help the more than 300 approved sellers on its exchange find new revenue opportunities and navigate mounting liquidity challenges,” MAXEX explained in a statement announcing the expansion.

Andy Payment, head of marketing at MAXEX, explained that lenders sell newly originated loans to MAXEX, which then executes a “simultaneous transaction with the investor.” He added that MAXEX is not a direct lender, but rather amplifies liquidity and efficiencies for originators “via a single set of guidelines that are agreed upon by all buyers that participate in the program.

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“We now also have the ability to help originators sell loans — jumbo, agency-eligible, DSCR — via forward trades (newly-originated loans that are pooled and settled at a future date) and bulk trades (closed/seasoned loans that are pooled and sold to one or more buyers via MAXEX —  i.e., a bank looking to draw down the number of loans on its balance sheet),” Payment wrote in email correspondence explaining the expanded MAXEX capabilities. 

“So, an originator looking to expand into DSCR in order to find new revenue,” Payment explained, “can turn to MAXEX for a program with ready-made guidelines and liquidity and sell those loans on a flow [selling a single, newly-originated loan via the exchange], forward or bulk basis.”

A recent MAXEX report noted that there appears to be a resurgence in the issuance of agency-eligible investment-property loans. Many of the loans traded through the MAXEX exchange find their way into loan pools for private label securities (PLS) transactions.

“Many of these [rental-property loan] transactions continue to have some seasoning with newer originations starting to show up as liquidity away from the agencies for certain loans with specific criteria,” the MAXEX report states. “Five [rental property-backed PLS] deals priced in March with volume nearly $1 billion higher than February.”

Many investment-property loans to individuals and small-businesses are underwritten using the DSCR formula, which is a measure of rental-property cash flow available to pay a mortgage obligation.

Pricing for MAXEX’s new DSCR program will be available beginning May 20, the company said.

“As we saw with the early days of the pandemic in 2020, liquidity has a tendency to dry up quickly in the non-agency mortgage market during periods of extreme dislocation as traditional investors migrate to more conservative positions,” said Brennan Walters, chief revenue officer at MAXEX. “One of the core principles of MAXEX is to provide its exchange participants with flexible, consistent liquidity despite market volatility. 

“We are committed to helping buyers and sellers become more efficient, and our focus on DSCR and bulk and forward services reflects that.”

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