Inside SitusAMC's cutting-edge end-to-end lending solutions

[00:00:00] Fergal McAlinden: Hello again and thanks for joining us on another edition of MPA TV. I'm Fergal McAlinden. I'm the news editor here at MPA and today we are continuing to talk top mortgage industry trends with one of the leading innovators currently operating in the space. SitusAMC is a firm whose services support clients through the entire mortgage life cycle partnering with real estate organizations to help them originate, transact and manage their real estate loans and assets. Here to talk us through some of the company's work in that area and the main trends that are expected for the year ahead, I'm very pleased to welcome Michael Franco, SitusAMC's Chief Executive Officer. Michael, thanks very much for joining us today. Great to see you. How is everything with you?

[00:00:40] Michael Franco: Very well. Thank you, Fergal for having me on. Appreciate it.

[00:00:44] Fergal McAlinden: Really looking forward to the chat today. Michael, I mean, we'll get into some of your offerings and services soon, but I mean, 2025, we're all looking ahead to a really eventful market, a lot of trends at play. I'm wondering how you guys are viewing the market in 2025 and what some of the main trends that you're noticing are.

[00:01:00] Michael Franco: Yeah, look, it's been an interesting start to the year. I think, you know, many people are not necessarily getting the market that they were anticipating. We haven't really been too surprised necessarily about the 10-year rising and subsequent moves in the mortgage rate. We kind of thought that the yield curve would normalize here as the Fed cut rates. And we expected to see more of an upward sloping yield curve, which meant that the 10-year wouldn't necessarily move and that mortgage rates would stay higher. So we've been anticipating and playing for rates more in the six and a half to seven and a quarter, uh, type of range and of course here we are today and we're north of seven percent so um you know the market certainly would like to see lower rates I think the MBA you know came out with an anticipation of lower rates but we've yet to see that really come through.

[00:02:00] Fergal McAlinden: For sure that jump above seven percent obviously the big news of this week, uh, the good news I've talked to a lot of brokers originators and not really surprised by it but uh definitely a challenge that you know they and their clients are having to overcome but I want to ask you about some of SitusAMC's work with their originators, Michael, and other primary market participants. What are some of the ways that you're helping them address challenges that they'll face throughout this year?

[00:02:26] Michael Franco: Absolutely. SitusAMC, we've been well-known in the secondary markets there. We support a lot of the securitization activity that's happening, but people don't necessarily fully appreciate everything that we do in the primary market. That's why we're happy to get on and talk about that. Today, we support the primary markets and originators with several offerings, including license underwriting, knowledge process outsourcing, component services, title search. We even have partnerships with technology firms such as Candor through their Candor Plus offering, where we're combining Candor technology and our fulfillment services to provide a unique solution to clients. We also facilitate the origination of loans that can be sold into the secondary market through pre-closed reviews. Institutions that may not be used to originating loans that are going to secondary market executions and are used to really selling to the GFCs, it can be a different experience for them. So being able to walk them through, How do you really originate these loans? How do you do it compliantly? How do you make sure that you're going to originate a loan that's going to get bought and not get a scratch and dent execution at the end of the day, which if you're trying to enter a new market and you start taking haircuts on the production, it... It's a real quick way to lose money fast. And then all of a sudden you're wondering, why am I doing this? So we're helping people kind of get into that and do it right. So that way they can grow the business moving forward. In addition to that, one of the other things that we own is compliances. So we're a trusted compliance partner, you know, through the compliances system. And that system, you know, we ran over 2 million loans, you know, last year to assess the residential mortgage compliance. And we also have a software that's actually utilized by warehouse lenders. So our pro-merit and WLS systems are used to facilitate lending between banking institutions and non-banks. And there's over $125 billion in commitments that are outstanding in those technologies. So in many different ways, whether it's service offerings or kind of technology that helps people originate loans, and whether they're going to a GSD execution or a... secondary market non-GSE execution.

[00:04:41] Fergal McAlinden: All right. And one thing that's interesting, Michael, I mentioned it in my intro, you've alluded to it, is in terms of a value proposition, you're involved in providing support throughout the entire mortgage lifecycle, not just one stage. Can you talk us through the company's work at each stage and how it helps originators there?

[00:04:56] Michael Franco: Absolutely. So we talked a little bit there on the primary markets and the things that we touch on. And then we move on into the secondary markets. And secondary markets is an area where I feel like we're very well known. And we're very well known there, mostly through our third party review or TPR review services. But there should be who don't know, if you're going to a private label securitization, you need a third party to review those loans and provide those reviews to the rating agencies and then there's regulatory filings that are associated with that as well, the 15-8 as that regulatory filing. So we're essentially conducting due diligence services that are conducted either on a pre-sale basis or a pre-purchase basis by parties in the secondary markets. These types of reviews, as I mentioned, are required for private label securitizations and they're often mandated within larger institutions just to get through their compliance hurdles. Our reviews cover a number of different areas, usually covering compliance, credit, collateral, data integrity. And if it's a seasoned loan or a loan that's been outstanding for a longer period of time, you'll have areas like title search, diligence that will do modifications, re-underwriting, a review of potentially collection comments or payment histories, especially if those loans have been re-performing or non-performing for some period of time. To help people execute in their secondary market strategies, we also have a number of technology offerings that we bring to market. We have a rate lock system, which is a conduit management platform helping people manage all their different sellers. We have a document management solution that we call DocuQuity. We have a document indexing and data extraction platform called Acuity. We have a loan accounting and service or oversight platform called SBO. We have a custodial system that's utilized by the majority of custodians called MBTrust. 80% roughly of custodial records are warehoused in that technology. We have a secondary market data management platform called Centricity. A number of different things that we do there. I will just bring up one more thing relative to secondary markets and securitization. We do have a unique value prop there. We're the only institution that's participated in roughly about 625 securitizations over the last three years, covering about 400,000 loans. So, you know, our expertise in this area is completely unmatched compared to anyone else in the industry.

[00:07:06] Fergal McAlinden: Yeah, that's interesting that you mentioned that. I mean, one big trend that is always at play in the mortgage industry and we're expecting to play out in 2025, as usual, is going to be competition. There's always new entrants to the space, always new innovation taking place. And, you know, everyone's kept on their toes. So I was wondering, and you've answered a little bit of it, but. Is there anything, Michael, that you feel really sets SituAMC apart and makes it unique in the industry compared to some of its competitors? 

[00:07:34] Michael Franco: Absolutely. It's a great question. And as you said, the markets are constantly evolving and changing, and you have to change and evolve associated with that. So I think there's a number of different things that really sets us apart. And some of that is the size and scale and depth of our organization. We're a market leader in most of the areas that we plan. So as I'm going through all those different qualifications, if you will. There's just so many things that we touch and we do in. This scale of everything that we could do, going from the primary markets to the secondary markets, we become the go-to provider in a lot of those areas because of all those capabilities. One of the things I didn't even touch on there is we're actually also a valuer of mortgage servicing rights. Even after you originate these loans and you have to sell them, We're the leading valuer of mortgage servicing rights, valuing $7 trillion in mortgage servicing rights on a monthly basis. We're valuing cold loans too for people who hold that, hundreds of billions in home loans. That really is what differentiates us. We're not just somebody who could be a spot solution provider. We're happy to do that for people, but we could really be a partner to help you execute on the entirety of your business strategy. from originating those loans to selling those loans, to managing existing positions that you have in portfolio, to even selling potentially MSRs, the valuing assets that you have. We're a more holistic provider. Because of that, we tend to be very partner-focused and client-centric in our business delivery because we're really looking at this as a long-term client relationship. We want people to be our clients for the next 20, 30 years, not just hey, they have a trade and we're going to get this done in the next week or two, and then hopefully they give us a call at some point in the future, we could take a longer term outlook. 

[00:08:54] Fergal McAlinden: All right. So long term essential in that sense. Leads me on to my next question, which was about this year specifically. Anything that you're excited to share about what you'll be focusing on for the year ahead? Anything else that you'll be rolling out in 2025, Michael?

[00:09:08] Michael Franco: I think we're excited about continuing our growth here in the primary market side of the business. It's a heavy focus for us here in 2025 to raise awareness of everything that we can do on this side. And we think that everybody's going to be out there really looking for greater levels of efficiency in the market and trying to figure out what they can do to be more efficient, more effective in their business models. So we're doing the same. And one of the things that we're working on that I can't necessarily get into yet, but we are looking at other fintech type relationships like the Candor relationship that I just mentioned, where we're going to be looking to partner with specific institutions that are known in the fintech space to kind of combine the best of what they do with the best of what we do. And we think that that's a unique value proposition because there's a lot of great technologies out there. But unfortunately, a lot of times technology solutions, they solve one problem and create another one for you. And it's really the combination of potentially a great technology solution with a great business services provider that could give you a holistic solution that really addresses the problem statement that you're looking to get after. And that's where we think we're excited about going into heavily and differentiating ourselves here in 25. 

[00:10:15] Fergal McAlinden: Yeah, for sure. It's interesting that you mentioned that focus on efficiency. I mean, almost every mortgage professional that I speak to, when I ask them what their priority is for the year ahead or what their tech focus is, it's always streamlining, making things easier, making things more effective. But as you say, easier said than done. So yeah, great to hear that that's a focus area for you guys. Michael, we've covered plenty of ground today. I'm wondering if you have a closing message for our viewers before we wrap things up about working with SitusAMC and why it will benefit their business.

[00:10:44] Michael Franco: Yeah. Look. I think we believe that our clients are more successful than their peer groups. We're able to actually see that in the data. I talked about the number of securitizations that we're able to support, where we're effectively able to get clients to on a cost to produce. We're able to point to that our clients are more successful. Why should people look to partner with SitusAMC? Because we believe we could help you be more successful in your business strategy. and as I said, we try and... than to be client focused. We want to partner with you long term because we know that our success is really a derivative of our client success. If you're not successful, we can't be successful. So we want to make sure that we're putting you in the best positions possible and we're bringing unique solutions and really driving our clients through the best possible outcomes. 

[00:11:35] Fergal McAlinden: All right, perfect. Well, I think that's a great note to leave things off today. Michael. First of all, thanks for joining us on today's show. Really appreciate your insights. Great to hear everything that's happening at SitusAMC. Exciting things ahead this year, and I'm sure that we're going to check in with you again as the year goes on. So really appreciate joining us today.

[00:11:52] Michael Franco: Great. Thanks Fergal.

[00:11:54] Fergal McAlinden: All right. Well, that's just about all we have time for on today's edition of MPA TV. My thanks once again to Michael Franco and SitusAMC for joining us. Thanks to you for watching, and we will see you next time.