HOT COMMODITIES

Mortgage-backed securities a lending trend with sizzling marketing potential

One of Zaio’s most exciting niche-market opportunities is expanding by leaps and bounds, thanks to “securitization,” a lending trend that’s turning traditional mortgages into hot commodities.

As Doug Vincent, Zaio’s Managing Director, Corporate Development explains, many lenders now securitize some of their mortgage originations and portfolios, in effect selling an interest in the cash flow derived from the value of the properties. “Lenders essentially become clearing houses for money,” says Vincent. “They can secure their loans by packaging and selling them to Wall Street, and they can optimize the risk profile of their portfolios by constantly buying and selling mortgages on the open market.”

Although mortgage securitization represents a revolutionary approach to lending, its foundation is the same as any traditional system: for optimal success, assets must be supported by accurate valuations and data.

Zaio is ideally positioned to meet this need, and, according to Brad Stinson, Zaio founder and Chief Science Officer, there is considerable potential for Zaio to capitalize on this market segment. “The size of this market is a multiple of the mortgage origination market and one that our product is ideally equipped to satisfy,” says Stinson.

Until now, the industry has been relying on alternative property valuation methods for this segment, such as a Broker Price Opinion (BPO). Less comprehensive and less expensive than a traditional appraisal, the BPO is used by default in many cases, due to a lack of other options. In many cases they are superior to Automated Valuation Models (AVMs), but both of these methods often fail to provide consistently accurate and verifiable values. The only other option has been traditional appraisal products, which cannot usually be completed in time or at a market competitive price point… until now!  

“Zaio’s GeoScore™ bridges the gap between the current service offerings with a significantly superior, more comprehensive analysis performed by a licensed, trained appraiser,” says Vincent. “Lenders can quickly and easily access supported values and identify trends with Zaio’s granular analysis of real estate markets. Beyond the innovative and competitively priced instant property valuation products, there are various additional data categories clients can access to help them track trends and optimize assets and portfolios, such as an index at the zip code level, housing inventory changes, types of homes… percentage of market that are condo, or single family or manufactured homes, and trends with condition and vacancy. The Zaio database can produce an almost unlimited amount of valuable analytics to serve this customer segment.”  

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