Safe as houses
What holds 21 million mortgage files with a follow-the-sun team that can handle as many as 30,000 to 40,000 loan reviews in one day? flow takes a closer look at Deutsche Bank’s document custody service located in Santa Ana, California, and its central role in supporting the US mortgage market
T
he US real estate market has seen significant change since the 2008 downturn that translated into a
broad financial crisis. From significant government action to industry reformation and better underwriting standards, to instituting guard rails through legislative reforms like Dodd-Frank and the Housing and Economic Recovery Act of 2008, various initiatives have gone a long way to restoring confidence in this asset class for investors.
A changing landscape As Gary Vaughan, Deutsche Bank’s Head of Corporate Trust Americas, reflects, “As a result of the credit crisis, the mortgage market changed dramatically, with GSEs (government sponsored entities) taking a much larger role in the mortgage industry to stabilise things. This model has proven to be successful and is why these agencies exist.”
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This article provides further insights into the secondary mortgage market, and what is involved in managing loan documents across the range of parties involved in origination, warehouse lending (funding facilities for non-bank mortgage originators) and securitisation, over the life of these loans. The role of the document custodian is a critical one, and it remains pivotal as it facilitates the secure storage and retrieval of loan documentation on behalf of stakeholders. Deutsche Bank has built a commanding presence in the US document custody market over the past three decades, where buy-side and sell-side communities dealing in loans look to Deutsche Bank to independently review, report and safeguard their physical and electronic loan documents. One indicator of the document custodian’s importance to the
US mortgage market was the fact that during the pandemic, when most people were working from home, more than 700 operations staff physically processed around 4,000 overnight packages from FedEx and UPS each day, on average. “This is a paper-intensive business with thousands of packages arriving daily that require same-day review. We were physically on the premises for our clients during the pandemic when it mattered the most to them. This really solidified our standing in the space,” says Vaughan.
US primary and secondary mortgage and asset-backed securities markets Generally, when a US borrower applies for a first home loan purchase or refinancing from a lender, this liability winds up as part of a bond offering (pool of mortgages) to the primary securitisation market. The sale of
Photography: Alamy, Deutsche Bank
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