Wholesale bank launches peer-to-peer mortgage trading platform

by MPA08 Apr 2015
The Federal Home Loan Bank of New York (FHLBNY) and MAX Exchange (MAX), a multi-seller to multi-buyer exchange and clearing house for residential mortgage loans, have launched a pilot program that will enable approved FHLBNY members to sell conforming and jumbo residential whole loan mortgages on an open exchange platform.

"Our mission includes helping to improve our members' capacity to serve their markets," said José R. González, president and CEO of the FHLBNY.  "In partnering with MAX, we believe that this exchange can provide responsible local lenders with easy secondary mortgage market access and better execution."

"MAX Exchange increases trust by delivering standardization, transparency and certainty, which we believe will increase confidence and level the playing field for buyers and sellers of all sizes in the secondary mortgage market," said Tom Pearce, president and CEO of MAX. "The MAX Exchange provides a true peer-to-peer trading platform for the residential mortgage markets."

The MAX Exchange is an independent market utility that provides an open exchange platform for buying and selling mortgage loans and includes secondary market settlement with objective loan reviews, life-of-loan surveillance and a fair and efficient dispute resolution process to protect both buyers and sellers. 

The goal of the MAX Exchange is to deliver standardized products, guidelines and procedures that reduce transaction costs and provide buyers and sellers with a single pipeline through which they can trade with many qualified counterparties. By providing an investment-grade backstop behind a seller’s loan repurchase obligations, MAX provides certainty of recourse for buyers and enhances the value of all mortgage assets traded through the exchange.

The pilot program will include a limited number of pre-approved traditional secondary mortgage investors as buyers and a limited number of qualified FHLBNY members as both sellers and buyers.

FHLBNY is part of the Federal Home Loan Bank System, a national wholesale banking network of 12 regional, stockholder-owned banks. The FHLB of New York currently serves more than 340 financial institutions in New Jersey, New York, Puerto Rico, and the U.S. Virgin Islands.



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