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SitusAMC creating safety net for the private-label market

Securent is expanding its reach into the private-label market with plans to introduce a loan-defect insurance product for (RMBS) transactions.
The post SitusAMC creating safety net for the private-label market appeared first on HousingWire.



SitusAMC President Michael Franco

SitusAMC subsidiary Securent is expanding its reach into the private-label market with plans to soon introduce a loan-defect insurance product for residential mortgage-backed securities (RMBS) transactions, according to executives from both companies. 

The initial focus of Securent, which was launched late last year, has been to provide loan-level loan-defect insurance for third-party mortgage originators working in the agency space, the executives said. The company is now preparing to unveil similar coverage for the secondary market with the goal of introducing a private-label insurance product in 2022.

Securent’s parent company is well-positioned to help it make a successful foray into that largely uncharted insurance market, which is regulated at the state level. SitusAMC, a leading provider of services and technology to the real estate industry, controls some 60% to 70% of the due-diligence loan-review market, according to its president, Michael Franco. In terms of competition, Franco added that the private-label market is now largely uncharted territory with respect to loan-defect insurance. 

“Securent is a live insurance concept that has started working with the agency end of the market but is looking to expand into nonagency side to support both whole-loan trading and [private-label] securitization transactions in 2022,” Franco said. “Nobody else has done loan-defect insurance for securitizations yet.”

Justin Vedder, president of Securent, explained that loan-defect insurance covers most loan-origination errors and omissions. He said that might include cases where income requirements or some other underwriting guideline is miscalculated during the origination process, adding that the insurance would kick in if those defects prompt either a loan default or the inability to sell the loan.

Franco added that to get that insurance benefit, loans would require a third-party review.

“We are getting licensed in every state,” Vedder said, adding that includes meeting the capitalization requirements for operating in each state. “So, it’s not cheap to get into the business.

“… We have internal resources that have helped us develop a pricing model [for the insurance] that takes into account losses given defaults and economic issues like COVID-19, and we use Moody’s models along with a couple other models — plus some historical purchase data from Fannie Mae and Freddie Mac,” Vedder explained. “We combine that all together into a special sauce and that creates a price on a loan-by-loan basis and a pool-by-pool basis.” 

As part of a private-label securitization transaction, hundreds or even thousands of mortgages are pooled, vetted and placed in a trust. Securities backed by the loans are then issued and sold to investors.

Vedder, who has two decades of experience in the mortgage-banking and insurance markets, says Securent also is currently in discussions with ratings agencies and RMBS issuers about how the company’s loan-defect insurance products can best serve the private-label securitization market. He stressed that SitusAMC and its resources also will be leveraged by Securent because of “all the technology and all the capability and all the expertise they have around the secondary market.”

Franco declined to comment on the potential premium income that might be generated by Securent in providing loan-defect insurance for the secondary market, though he did say “if premium dollars weren’t in the millions, then why do it?” He added that RMBS issuers would purchase the loan-defect insurance coverage for mortgages backing private-label issuances, and the premiums would be funded by proceeds from the securitization deal, “just as attorneys and deal structurers get paid.”

“The insurance premium would be something that the [mortgage securitization] trust would pay, and that way the insurance would be for the trust’s benefit,” he added.

Securent’s efforts to introduce loan-defect insurance in the private-label market also benefits from good timing. The huge boom in single-family mortgage originations in recent years — some $8 trillion worth over the past two years, according to the Mortgage Bankers Association — has fueled double-digit growth of the private-label market based on securitized loan volume. 

On the other hand, that growth also has created a ripe environment for loan-origination defects. A December report by ACES Quality Management, a technology provider to the financial-services industry, shows the overall “critical defect” rate for mortgage originations in the second quarter of 2021 was 2.27%, up from 2.01% in the prior quarter. 

The single largest error rate by far, according to the ACES report, was in the category of “income/employment,” which accounted for more than 32% of all critical loan defects in the second quarter of last year. The report is based on an examination of post-closing mortgage data from 100,000 unique mortgage-origination records, with defects categorized using Fannie Mae’s classification system — or taxonomy.

“It has been a hot market,” Vedder said. “I’m not blaming anyone, but they [lenders] couldn’t hire fast enough, vendors couldn’t hire fast enough. It was just a complete explosion.

“So, you had processors probably doing some underwriting, and people stressed from working so many hours. … So, that’s why you have had so many manufacturing [loan-origination] defects in my opinion.”

Franco added a hypothetical event to the mix to explain the safety-net benefit of insuring loan pools against critical loan-defect risks. He said that if some lender and RMBS issuer “went sideways,” causing the business to fail after the lender had originated a lot of loans with critical defects that are now part of a securitized loan pool, “then the trust [overseeing the loans] has no recourse” for recouping the losses.

“But if you have insurance … standing behind the transaction, then you are covered for any manufacturing defects that occurred. … We’re trying to bring a higher level of liquidity and visibility into markets [and] that is healthy overall for more securitization volume on the nonagency side.”

Adds Vedder: “We’re actively discussing securitizations with Issuers now to decide how to best structure a policy that works to make the most efficient securitization and claims process we can possibly make. We want to make sure all parties win …. and luckily we have nice clients that want to work with us to kind of explore and develop this product with us.”

The post SitusAMC creating safety net for the private-label market appeared first on HousingWire.

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Bitcoin price must break $31K to avoid 2023 ‘bearish fractal’

BTC price needs to recoup some more key levels before ditching longer-term bearish risk, the latest Bitcoin analysis says.



BTC price needs to recoup some more key levels before ditching longer-term bearish risk, the latest Bitcoin analysis says.

Bitcoin (BTC) held above $30,000 at the Oct. 23 Wall Street open as analysis said BTC price strength could cancel its “bearish fractal.”

BTC/USD 1-hour chart. Source: TradingView

BTC price preserves majority of early upside

Data from Cointelegraph Markets Pro and TradingView followed BTC/USD as it hovered near $30,700, still up 2.5% on Oct. 23.

The largest cryptocurrency made snap gains after the Oct. 22 weekly close, stopping just shy of $31,000 in what became its highest levels since July. 

Now, popular trader and analyst Rekt Capital is keen to see the $31,000 level break. 

“Bitcoin has Weekly Closed above the Lower High resistance to confirm the breakout,” he commented alongside the weekly chart.

BTC/USD annotated chart. Source: Rekt Capital/X

Rekt Capital argued that BTC/USD could disregard the bearish chart fractal in play throughout 2023 next. This had involved the two year-to-date highs near $32,000 forming a doubletop formation, with downside due as a result.

Specifically, Bitcoin requires a “breach” of $31,000 in order to do so. 

More encouraging cues came from the True Market Deviation indicator from on-chain analytics firm Glassnode.

As noted by its lead analyst, Checkmate, on Oct. 23, the metric, also known as the Average Active Investor (AVIV) profit ratio, has crossed a key level.

Bitcoin’s True Mean Market price (TMM) — the level that BTC/USD spends exactly 50% above or below — is now below its spot price, at $29,780. 

“Have we now paid our bear market dues?” Checkmate queried, describing TMM as Bitcoin’s “most accurate cost basis model.”

Bitcoin True Market Deviation (AVIV) chart. Source: Checkmate/X

Institutions awaken in “Uptober"

Analyzing the potential drivers of the rally, meanwhile, James Van Straten, research and data analyst at crypto insights firm CryptoSlate, flagged the potential approval of the United States’ first Bitcoin spot-price-based exchange-traded fund (ETF).

Related: BTC price nears 2023 highs — 5 things to know in Bitcoin this week

While not yet awarded the green light, a U.S. spot ETF is being treated as an inevitability after legal battles resulted in regulators losing sway.

“The potential approval of a spot ETF for Bitcoin has spurred a significant increase in bullish inflows in the crypto market,” Van Straten wrote in an update published on Oct. 23.

He noted that Glassnode data shows inflows via over-the-counter (OTC) trading desks spiking since late September.

“In addition, the Purpose Bitcoin ETF, with its holdings of approximately 25,000 Bitcoin, has observed consistent inflow throughout the past month. Even though these inflows might not be termed as ‘large,’ they denote a positive market sentiment,” he continued.

“This uptick in inflows across various platforms indicates an optimistic market response to the potential approval of a Bitcoin ETF, bolstering the overall landscape of digital assets.”
Bitcoin transfers to OTC desk wallets. Source: CryptoSlate/Glassnode

The largest Bitcoin institutional investment vehicle, the Grayscale Bitcoin Trust (GBTC), continues to see a lower discount to the Bitcoin spot price, having already seen its smallest negative margin since December 2021.

This stood at -13.12% as of Oct. 23, per data from monitoring resource CoinGlass.

GBTC premium vs. asset holdings vs. BTC/USD chart (screenshot). Source: CoinGlass

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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California bill aims to cap crypto ATM withdrawals at $1K per day to combat scams

A new legislative investigation found some crypto ATMs charging a premium as high as 33%, while a few ATMs had limits of up to $50,000.



A new legislative investigation found some crypto ATMs charging a premium as high as 33%, while a few ATMs had limits of up to $50,000. California legislators have proposed a new bill titled “Digital financial asset transaction kiosks,” calling for a cap on crypto ATM withdrawals of $1,000 per day in light of growing scams. Additionally, starting in 2025, the law would limit operators’ fees to $5 or 15% (whichever is higher). The bill, if approved, would come into effect on Jan. 1, 2024. The bill was introduced after legislative members visited a crypto ATM in Sacramento and found markups as high as 33% on some crypto assets compared with their prices on crypto exchanges. On average, a crypto ATM charges fees between 12% and 25%, according to a legislative analysis. Government officials also found ATMs with limits as high as $50,000, prompting them to take regulatory measures to curb such high premiums and withdrawal limits. There are more than 3,200 Bitcoin ATMs in California, according to Coin ATM Radar. Democratic State Senator Monique Limón, who co-authored the proposed legislation, said the “new bill is about ensuring that people who have been frauded in our communities don’t continue to watch our state step aside” when there are real issues happening. Another provision of the bill would require digital financial asset businesses to obtain a license from the California Department of Financial Protection and Innovation by July 2025 Crypto ATMs are a popular way for people to exchange cash for their choice of cryptocurrency but have become a hub for scams and exploits because of the nature of transactions (i.e., hard cash). Unlike bank and wire transfers, each transaction leaves less of a trail. Related: CoinSmart president says crypto taxes are a ‘little bit more favorable’ outside US Some residents have recently been caught up in such scams, where the scammer persuades the victim to go to a nearby crypto ATM and deposit cash for the crypto of their choice. Some of those affected by ATM scams have lauded the bill and said the low transaction limit would give victims time to realize if they are being duped, reported the LA Times. On the other hand, crypto ATM businesses said the new bill would harm the small operators who must pay rent on their ATMs. The operators noted that the bill fails to address the core issue of the fraud and instead takes a punitive path focused on a specific technology. They warned such a move would shudder the industry and hurt consumers while doing nothing to stop bad actors. Magazine: Bitcoin is on a collision course with ‘Net Zero’ promises

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Fighting the Surveillance State Begins with the Individual

It’s a well-known fact at this point that in the United States and most of the so-called free countries that there is a robust surveillance state in…



It’s a well-known fact at this point that in the United States and most of the so-called free countries that there is a robust surveillance state in place, collecting data on the entire populace. This has been proven beyond a shadow of a doubt by people like Edward Snowden, a National Security Agency (NSA) whistleblower who exposed that the NSA was conducting mass surveillance on US citizens and the world as a whole. The NSA used applications like those from Prism Systems to piggyback on corporations and the data collection their users had agreed to in the terms of service. Google would scan all emails sent to a Gmail address to use for personalized advertising. The government then went to these companies and demanded the data, and this is what makes the surveillance state so interesting. Neo-Marxists like Shoshana Zuboff have dubbed this “surveillance capitalism.” In China, the mass surveillance is conducted at a loss. Setting up closed-circuit television cameras and hiring government workers to be a mandatory editorial staff for blogs and social media can get quite expensive. But if you parasitically leech off a profitable business practice it means that the surveillance state will turn a profit, which is a great asset and an even greater weakness for the system. You see, when that is what your surveillance state is predicated on you’ve effectively given your subjects an opt-out button. They stop using services that spy on them. There is software and online services that are called “open source,” which refers to software whose code is publicly available and can be viewed by anyone so that you can see exactly what that software does. The opposite of this, and what you’re likely already familiar with, is proprietary software. Open-source software generally markets itself as privacy respecting and doesn’t participate in data collection. Services like that can really undo the tricky situation we’ve found ourselves in. It’s a simple fact of life that when the government is given a power—whether that be to regulate, surveil, tax, or plunder—it is nigh impossible to wrestle it away from the state outside somehow disposing of the state entirely. This is why the issue of undoing mass surveillance is of the utmost importance. If the government has the power to spy on its populace, it will. There are people, like the creators of The Social Dilemma, who think that the solution to these privacy invasions isn’t less government but more government, arguing that data collection should be taxed to dissuade the practice or that regulation needs to be put into place to actively prevent abuses. This is silly to anyone who understands the effect regulations have and how the internet really works. You see, data collection is necessary. You can’t have email without some elements of data collection because it’s simply how the protocol functions. The issue is how that data is stored and used. A tax on data collection itself will simply become another cost of doing business. A large company like Google can afford to pay a tax. But a company like Proton Mail, a smaller, more privacy-respecting business, likely couldn’t. Proton Mail’s business model is based on paid subscriptions. If there were additional taxes imposed on them, it’s possible that they would not be able to afford the cost and would be forced out of the market. To reiterate, if one really cares about the destruction of the surveillance state, the first step is to personally make changes to how you interact with online services and to whom you choose to give your data.

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