NEW ELECTRONIC INTERMEDIARY
Industrywide Mortgage Exchange, Inc. (IMX)
Introduction:
IMX Exchange, a pioneer in e-commerce for the wholesale mortgage industry, is a business-to-business trading network that brings together mortgage brokers and lenders. IMX is an electronic commerce system for mortgage lenders and originators to buy and sell mortgage loans. The IMX service enables lenders to search for, bid on, and purchase loans from brokers in multiple markets through on-line extranet technology. The matchmaker system from Industrywide Mortgage Exchange will let lenders search for, bid on, and purchase loans from brokers in multiple markets through a private network. Lenders can combine over 30 variables to custom tailor their bids, including using it to identify loans that would fulfill affordable housing commitments.
IMX founded in 1995 has forged a number of strategic and technology partnerships in the industry, developing direct interfaces with Point, Contour and Genesis 2000 software, as well as gaining broad access to the lender community through Freddie Mac's GoldWorks network. Citicorp is one of the blue-chip investors who support the company and the Exchange. Others include Lehman Brothers, BancBoston Capital, Presidio Venture Partners, Hummer Winblad Venture Partners, Mohr, Davidow Ventures, Technology Crossover Ventures, Piper Jaffray Ventures and Intel Corporation.
Trading in IMX Exchange has reached one billion mark in 1999 and in July 1999 it has reached a volume of US $ 1.5 billions. Presently it has a membership of approximately 1,050 total mortgage broker shops representing over 5,000 individual loan originators, and it is open for trading in 21 states and has accepted Premier Broker members in an additional 19 states. It has a participation by around 100 mortgage lenders and the strategic integration with the GOLDWORKS of Freddie Mac takes the total lenders participation to a total 1100 lenders in the exchange.
Classification:
IMX Exchange is basically a vertical hub with clear focus on the mortgage industry process. IMX is of the view that the advent of internet will not change the broad mortgage industry structure and its players.Unlike other online mortgage sites who directly go to the borrower cutting out the mortgage broker, IMX recognizes the value these professionals bring to both consumers and lenders and it has developed a system to bring the power and reach of the Internet to brokers and lenders.
How IMX® Exchange Works
Benefits and Marketing:
The IMX Exchange enables mortgage brokers an instant access to a nationwide pool of lenders bidding on their clients loans and for lenders it offers a avenue to expand nationally and increase market share with lower cost. IMX eliminates the paper chase in the mortgage origination process by moving the entire process into an anonymous electronic trading environment. In addition it also prevents logistical headaches, saves time and enables a broader reach for both brokers and lenders. It enables widely dispersed brokers and lenders to come together to close mortgage loans in an efficient, time saving and low cost means. It significantly reduces the sales cycle time by enabling the total appraisal and approval of loan application and thereby enables the brokers and lenders to increase their business volume.IMX reduces office overhead and gives brokers exposure to a larger pool of lenders.
The key benefit to the broker is that IMX replaces an archaic system in which the broker had to comb through more than a hundred rate sheets that were faxed daily to find a program that would work for a client. The broker then had to call a wholesale loan representative for details of the program. The benefits to the lenders is that under the fax-based system, the lenders daily faxes commit them to specific interest rates. IMX Exchange allows lenders to monitor interest rates and make changes to product offerings in real time. The exchange also helps them fulfill government lending requirements. For example, lenders must devote a portion of their portfolios to borrowers in low-income areas, but lenders often have trouble identifying such applicants. When home-buyer information is entered into IMX Exchange, zip codes are automatically linked with census information, which helps lenders find profiles that meet the government's requirements.And it also enables them to enter new markets but also to expand at a significantly lower costs. This benefit is significant for smaller lenders as through IMX they will be able to enter markets which were reserved for bigger players earlier.
The success of IMX Exchange essentially depends on the participation of both mortgage brokers and lenders. The approach of IMX has been to market itself to both brokers and lenders by highlighting the significant advantages of their participation in the exchange. The sense of community is created through membership based participation. It has also recently honored brokers who have been successfully traded more than 100 mortgages. IMX Exchange has also recently signed three new strategic partnership agreements to bring additional value-added services and functionality to its members. Services offered by LoanUPDATE.com, Inc. will provide IMX Exchange broker members with online tools to facilitate customer relationship and pipeline management. Neighborhood crime data, providing valuable information for broker and lender members as well as for consumer visitors to the IMX Exchange web site, will be offered through a partnership with CrimeCheck. These services will be made available to members through the IMX Exchange web site over the next several weeks. In addition, IMX will be developing an interface with Lender's Credit, an affiliate of INFO1, to offer credit reports through the Exchange to assist broker and lender members in evaluating the loan applications posted on the system.
IMX had to establish trust if it was to maintain an anonymous bidding system. The integrity and quality of both sides is very high and IMX monitors trading activity. Also applicants are screened for membership and brokers with a history of fraudulent loans won't make it. IMX charges each brokers a $75 fee to join and each loan that is successfully bid carries a fee paid by the lender out of escrow.
E-Obstacles:
Mortgage business essentially deals with financing of homes for home buyers. The key issue confronting the lenders in the mortgage business is with reference to determining the value of the home they are proposing to mortgage.The asset specificity, description and valuation problems in mortgage business are solved through the appraisal report of the home proposed to be financed. The appraisal report essentially carries out a detailed evaluation of the home and arrives at the value of the home proposed to be mortgaged. This value is the starting point for the determination of the amount of the mortgage loan. This reduces the burden on the IMX Exchange with regard to over coming E-obstacles with regard to successful mortgage closing process.
IMX is essentially an exchange which brings together brokers and lenders together to close mortgage loans. It receives a fee from the lender after successful closing of the loan and the actual payment process essentially takes place between the lender and the home buyer. So there are no major payment issues involved in the whole process but for the receipt of the fees from the lender for the successful closing of mortgage transaction.
Security and Technology Issues:
Blind auction environments like IMX's are among the most promising examples of electronic commerce on the Internet. But while the IMX system could easily run over the Internet, it doesn't. Wary of general concerns over Internet security and reliability, IMX offers its exchange over the IBM Global Network, a private network used by many financial institutions. The present IBM Global Network system can be easily shifted to a web based if the need arises.