Curtis Richins of MCT on the Changing Digital Marketplace

Curtis Richins is President & CEO of Mortgage Capital Trading and Agile Trading Technologies, San Diego. He is experienced in international finance, marketing, risk management and business operations. He has worked extensively in Europe, in addition to his U.S.-based mortgage banking experience. He is knowledgeable in all aspects of mortgage capital markets, including pipeline hedging and best-execution loan sales. He is an active member and consultant to the mortgage banking community at the national, state and local levels.

Richins is a founding Partner of MCT and has served as President and CEO since 2007. He is also Co-Founder, President, and CEO of Agile Trading Technologies since its inception in 2021.

MBA NEWSLINK: What are some of the biggest changes you’ve seen in your business over the past several years?

CURTIS RICHINS: Over the past 20 years, we have seen multiple changes in the mortgage secondary capital markets. One of the most notable differences is the sophistication of the loan sale best execution analysis, also known as BestEx. It has evolved from manual and spreadsheet-driven processes to a more automated solution. To date, it has opened doors to many more buyers, fee-adjusted considerations, automated bids tapes, release versus retain decisions, Assignment of Trade, co-issue, etc. MCT’s whole loan mortgage exchange extends the process even further by enabling “unapproved” counterparties to participate in the bid tape auction process.

Another big advancement is the digitization of workflows that were once lender-specific and analog. Automated AOT executions, digital TBA trading, and whole loan sales via marketplaces come to mind, but there are a variety of advancements – each increasing efficiency, liquidity, and execution. Automation, digitization and democratization have been hallmarks of MCT and Agile’s impact on the industry.

NEWSLINK: How would you define “trading” in the mortgage marketplace to a potential client?

RICHINS: Mortgage lenders, such as banks, credit unions and independent mortgage bankers, are the starting point of the activity chain, and the loans they originate are ultimately bought by an investor, aggregator, or government-sponsored enterprise. In this context, the loan or pools of loans are “traded” from lender to investor.

At the same time, if a mortgage lender is hedging their interest rate risk, lenders often use financial instruments, such as to-be-announced mortgage-backed securities, to protect the value of their loans – from the time the loan is locked to the time it’s closed and sold.

Prior to a few years ago, TBAs were bid at and offered over the phone between a lender and a broker-dealer. With the emergence of Agile Trading Technologies and its electronic platform, mortgage lenders can digitally trade TBAs in competition among a group of broker-dealers to ensure they are receiving the best price.

Mortgage Servicing Rights are also traded in the secondary marketplace. At the time of loan sale, lenders must decide if they want to own or sell as a whole loan or via co-issue. Recently, many lenders who own MSR portfolios have chosen to sell in bulk given rising mortgage rates.

NEWSLINK: How do you see the digital marketplace evolving further? What are some of the dynamics that are influencing this evolution?

RICHINS: The mortgage industry is slowly, but surely, evolving its digital marketplaces. In it, we will see the emergence and growth of a few competing national mortgage asset exchanges. This will likely include whole loan and mortgage servicing rights assets.

A key benefit of digital exchanges will be increased liquidity for mortgage assets, driven by more sell-side volume and buy-side participation. Already, there are exchanges that can accommodate transactions between unapproved and approved counterparties, such as MCT’s BAM Marketplace. Given common underwriting standards, Agency eligible loans are likely to be most prevalent with certain subsets – such as community reinvestment act, second homes, nonowner occupied and scratch and dent – also trading.

NEWSLINK: Do you see your focus narrowing, or do you see opportunities to expand to other products and loan types?

RICHINS: At MCT and Agile, we are always pushing the boundaries of digitization and automation in pursuit of efficiency, transparency and profitability for our clients. In parallel, we pay cautious and necessary consideration to the security and privacy of client data and information.

We’re constantly striving to innovate. For example, we are working to harmonize underwriting guidelines on non-agency products to catalyze buy-side participation and increase liquidity for the sell-side.

NEWSLINK: How do macro-economic issues, i.e., inflation, recession, shape your business approach?

RICHINS: For our clients, managing interest rate risk is a mission-critical activity regardless of the macroeconomic environment. In times of lean volumes, such as now, lenders need to maximize their gains on sale performance. As such, they must fully leverage the secondary mortgage markets.

For MCT, we have a 20-year track record of doing what’s right for our clients. Time and again, independent industry surveys for client loyalty and satisfaction validate our mission and values. In fact, STRATMOR rated us the top provider in overall client satisfaction across the entire mortgage ecosystem, (not solely pipeline hedging, MSR, or loan sales) because we genuinely care about our clients’ success. We bring the best talent and technology and apply it in a thoughtful way for each and every client.

For Agile, we will continue to rethink the status quo and push for broader access to electronic platform solutions. Agile, launched in 2021, is just getting started and growing quickly. We’re extremely encouraged by the warm reception we’ve received from mortgage lenders of all sizes and broker-dealers, regional and primary.

NEWSLINK: Where do you see opportunities in the near term and longer-term?

RICHINS: MCT and Agile will continue to execute against our strategic plans and goals. In the simplest of terms, this translates to delighting our clients each and every day with the best people who have access to the most advanced technology platform. We want to modernize and revolutionize the secondary mortgage markets via innovation that prioritizes efficiency, transparency, and increased liquidity.

We meet clients wherever they are in their growth cycle. If a client wants to benefit from our technology and also desires hands-on support, we are there for them. Alternatively, if they opt for autonomous use of our award-winning, all-inclusive capital markets platform, we’re ready to enable them. Near-term and long-term, it’s about helping our clients thrive.

(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at msorohan@mba.org; or Michael Tucker, editorial manager, at mtucker@mba.org.)