Thomas J. Healy, CMB.

Author:Healy, Thomas J.


Level1Analytics provides an economic and transparent way to value and stress-test mortgage loan and mortgage servicing portfolios without the need for specialized staff, intensive assumption defense, costly hardware, and difficult-to-learn-and-maintain software. The company's mission is to provide a first-of-its-kind, cloud-based, economical, do-it-yourself valuation tool that allows owners, managers and regulators of mortgage servicing portfolios to better understand these complex assets.

In short, Healy and his team have created a tool that smaller mortgage lenders can use to help them get back into the game of servicing and mortgage lending at a time when the assets associated with that business have become increasingly risky, expensive to service and hard to reserve against. Think about how many mortgage servicers and investors got burned by mortgage servicing rights after the foreclosure crisis went nuclear. If they'd had tools that could have helped them predict or avoid that experience beforehand, what do you think they would have given to obtain that kind of knowledge? A lot, is the short answer.

Tom Healy knows a lot about banking and valuing financial assets, especially mortgage servicing rights. Back in the early 1980s, he was the chief financial officer of the consumer sector at Chase Manhattan Bank in New York. The bank was in the midst of a national expansion-planning exercise and he was on the team reviewing the financial efficacy of various business lines under consideration. One of them was the mortgage banking business.

What kind of technology was available at the time? "It was fairly rudimentary." he says with dramatic understatement. "Hard-copy books of correspondent prices were the primary means of pricing in originations. The telephone was the major servicing technology," he says.

He says in the early 1980s, servicing was still an off-balance-sheet asset, and did not need to be valued.

Healy says his group made a major step forward with the first loan-level servicing valuation model in the late 1980s. He recalls that a robust secondary market for servicing assets developed throughout the 1980s and 1990s. Also, with the adoption of a new accounting rule (Financial Accounting Statement 65), servicing rights had to be capitalized on the balance sheet and marked to market periodically.

For all those reasons and more, says Healy, "it became necessary to progress past...

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