Mortgage hedge advisory and secondary marketing software firm Mortgage Capital Trading Inc. (MCT) says it has found a way to automate the Tri-Party Agreement required between lenders, investors, and broker dealers during Assignment Of Trade (AOT) transactions in the secondary market – a first in the industry.
The functionality is now a part of MCT’s Bid Auction Manager (BAM) bid tape management and best execution platform. It is expected to be a game-changing new delivery option for the secondary market.
In a release, MCT claims this first-of-its kind functionality adds significant value to lenders and investors and establishes newfound efficiencies for bid tape AOT executions. Company officials say that the bid-tape AOT execution is poised to gain rapid adoption and will likely account for a substantial portion of lenders’ agency commitments to correspondent investors.
MCT collaborated with Wells Fargo to streamline the process of executing the Tri-Party Agreement, which leverages secure e-signature technology that is legally binding and enforceable.
After beta testing bid tape AOT with select sellers starting in early 2018, MCT rolled out support across their award-winning software, MCTlive!, in May. Bid tape AOT allows lenders to achieve bid tape pricing with the cash benefits of assigning the trade and has been welcomed with excitement from MCT lender clients.
One of the final hurdles in the AOT process was the requirement of lender, investor and broker dealer to each sign and return an agreement pertaining to every assignment. This process has now been completely digitized and streamlined.
Although the availability of bid tape AOT executions is currently limited, MCT expects the popularity of this delivery option to steadily increase. As more investors roll out bid tape AOT programs, the automated tri-party functionality will be integrated accordingly.