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MAXEX, the first digital mortgage exchange to enable the trading of residential loans through a single clearinghouse, announced a secured strategic investment from J.P. Morgan, with participation from existing MAXEX investors AGNC Ventures and Moore Asset Backed Fund, LP.
The investment is intended to accelerate broad market adoption of the MAXEX exchange platform for buying and selling loans in the U.S. non-agency mortgage market. The strategic investment by J.P. Morgan follows a year of record growth for MAXEX. The company more than tripled its volume from 2019 and—as of March 31, 2021—exceeded $20 billion in aggregate trade lock volume since launching the platform.
“We are eager to see continued growth at MAXEX as they build a more liquid marketplace for trading mortgage loans,” said Marc Simpson managing director, head of Non-Agency Whole Loan and RMBS Trading, J.P. Morgan.
MAXEX is a liquidity provider for non-agency home mortgage loans, with its technology platform being utilized by industry lenders and institutional investors to greatly reduce the friction costs and risks associated with acquiring, securitizing and selling mortgage loans. Over 200 financial institutions nationwide have executed the company’s proprietary standardized contracts to trade on the exchange.
“In addition to the strategic investment from J.P. Morgan, we’ve created an equity incentive model designed to encourage co-investments in MAXEX from other buyers on the platform and motivate these buyers to trade through the exchange, which creates greater liquidity for our sellers,” said MAXEX chairman & CEO Tom Pearce. “This consortium model is consistent with the way other leading fixed income marketplaces have achieved broad market adoption.”
“The mortgage industry is pouring billions of dollars into digitizing the front end of the mortgage experience for consumers and lenders,” said MAXEX Advisory Board member Blythe Masters, a leading fintech executive, board director at Credit Suisse and digital banking pioneer. “In contrast, MAXEX is uniquely focused on the standardization and efficient intermediation needed to provide liquidity to lenders and efficiencies for investors. It is this back end of the market where untapped opportunities for digitization and growth still exist.”