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Compass Moves into the MSR Valuation Space
By Ted Cornwell
Compass Analytics has released a new software program, Mortgage Servicing Rights Analytics, to provide loan-level and aggregated modeling capabilities for mortgage servicers and investors in mortgage servicing rights.
The analytics were developed with significant input with MountainView Servicing Group, a Denver-based provider of servicing analytics and trading services. The new program will be integrated as part of Compass's mortgage analytics platform, CompassPoint.
Rob Kessel, Compass's managing partner, noted that the program will have subprime and alt-A functionality built in from the ground up, a feature he believes is important given the recent increase in delinquencies and defaults.
Mr. Kessel told MSN Bulletin that the servicing sector "is very much a focus for Compass right now." He said the new servicing valuation functionality will help the company compete for the business of larger mortgage servicers.
The MSR valuation analytics will include both static and option-adjusted spread valuations.
Compass plans to add additional servicing features to its suite of applications next year as well, he said. Those will include parallel processing capability and other powerful analytics that can meet the capacity needs of large mortgage servicers.
He said that working with MountainView was a natural fit, since the two firms already had a relationship and a respect for each other's capabilities.
He said the company's goal is to expand the CompassPoint mortgage analytics platform.
"Our vision there is that we are trying to produce one of the only truly integrated mortgage valuation platforms."
That means clients using CompassPoint for whole loan valuations or pricing for 1````1 deals can expect to be able to run through MSR valuations as well. The system also can provide credit enhancements based on prepayment and loss severity models used by the rating agencies.
"Given the recent jumps in delinquencies and foreclosure in non-agency products, we think a loan-level model with subprime and alt-A functionality built in from the ground up will be particularly valuable to the industry," Mr. Kessel said in a news release unveiling the MSR tools.
His company provides valuation and interest rate risk management tools to participants in the mortgage capital markets, including traders, originators, servicers and investors.
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