Executive Conversations is a HousingWire web series that profiles powerful people in the financial industry, highlighting the operations and the people that make this sector tick. In the latest installment, we sit down with Jeff Tennyson, COO at Clayton Holdings, to discuss the importance of real-time data analytics in the current regulatory environment and the company's hiring strategy.

Q: You just joined Clayton in February. What attracted you to the company?

Jeff TennysonA: Two things: its impressive history and its very bright future. I’ve known Clayton, our President Joe D’Urso and Green River Capital for years. I was an underwriting and due diligence client in my mortgage origination days as CEO of EquiFirst and, most recently, a single-family rental client of Green River’s when I was CEO of B2R Finance, an SFR originator. Clayton is the gold standard due diligence firm in the mortgage industry. We pioneered credit risk management and loan surveillance and continue to create innovative products and services that support the ever-changing mortgage landscape. For example, we created component services for the emerging SFR market and last year, when Clayton and Green River became a part of Radian, it opened the door for even more growth and opportunities. When Joe shared his vision for Clayton, along with the support we’d receive from Radian, it was easy to get excited to be a part of Clayton during this renaissance as we grow our capabilities and provide new products and services to our clients.

Q: Clayton has performed due diligence on more than 12 million loans. What does that depth of experience mean for your clients?

A: We provide confidence and credibility to our clients in their credit and compliance risk decisions. No due diligence firm in the mortgage industry has the breadth and depth of skills and experience we offer our clients every day. We’ve seen the industry highs and provided our clients timely and accurate underwriting and due diligence support. We’ve lived through the depths of the mortgage crisis and delivered to our clients candid and honest assessment of their credit and compliance risks, which allowed them to make better asset acquisition decisions.

Pre-crash, the private-label securities market reached $1 trillion a year and we responded with timely staffing of due diligence services across the globe. Today’s private-label market is much smaller at $30 billion, and participants — issuers, ratings agencies, investors and third-party reviewers — are all focused on quality, transparency and compliance, which naturally fit within our company’s sweet spot. As the industry’s due diligence provider of choice, Clayton has been engaged on 75% of new private-label deals since 2014. Our clients recognize our consistency in all market cycles and it provides us an experience and service delivery base that is unprecedented.

Q: What is the biggest challenge for your clients in the current environment? How is Clayton helping them to meet that challenge?

A: Our clients are facing many challenges, like lower levels of origination volume and private-label securitization issuance, but perhaps some of the biggest hurdles on everyone’s mind are the new regulations, like TRID, which will impact workflow and processes. In addition, we continue to assist our clients in finding more efficient ways to identify and manage the credit and compliance risks they are facing.

With the support of our parent Radian, Clayton is investing significantly in new capabilities, advanced technology and senior leadership to help our clients become more efficient, compliant and prepared for the mortgage road ahead. In fact, we recently acquired Red Bell Real Estate, a cutting-edge real estate brokerage, technology and data firm with industry-leading technology for enhanced property valuation and NPL and REO management.

Q: How important is dynamic analysis now?

A: Our industry relies on its third-party service providers to deliver thorough, value-added transparency when it comes to asset acquisition and origination transactions. Clayton’s leading edge and proprietary technology such as eClas, InCyt, and Red Bell, provide real-time data analytics and surveillance tools that assist our clients with their loan origination, asset acquisition and servicing analyses. Recently, we acquired GLASS servicing surveillance technology, which provides default management and regulator KPI analytics for servicing and sub-servicing reporting and oversight. GLASS is a perfect example of the new technology and dynamic analytics we are adding to better serve our clients.

Q: How have you been successful in recruiting industry experts to Clayton?

A: Clayton has always been committed to hiring the best and brightest employees to help maintain our industry leadership, which is critical to our culture, reputation and success. I’m honored to be a part of our impressive team of mortgage industry professionals, which now includes highly respected United Kingdom banker Tony Ward. He was recently hired to oversee our European subsidiary, Clayton Euro Risk, and globally expand our products and services.

We’ve also had success promoting talent from within. We recently asked Lorenz Schwarz to take over the new role of executive vice president of Strategic Initiatives and New Business at Clayton, and industry veteran Tim Reilly to step up and take Lorenz’s place as president of Green River. In addition, Katie Brewer just joined Green River as its new COO. Management changes like these allow Clayton to recognize our internal team and externally attract new executives to play to their strengths, add fresh new ideas and appropriately align skills and expertise with our corporate and client needs.

Q: How does Clayton combine tech resources with personnel to give the best service to its clients?

A: Combined, our team and technology allow us to provide the information and services that financial institutions, investors and government entities use to evaluate, acquire, securitize, service, and monitor loans and asset-backed securities. While our suite of tools can help identify loan fraud, credit and compliance risks and our extensive database can help benchmark, track, value and trend loan portfolios and operational performance, we consider our team of motivated, hard-working industry experts to be our most essential asset. They help us conduct our business with uncompromising levels of customer service and integrity.

One instance where our team and technology have come together with great synergy is in credit risk management/loan surveillance. Since 2012, we’ve performed more than 150,000 targeted reviews of assets to assess compliance with representations, regulatory and legal requirements, investor guidelines and settlement agreements. Green River recently launched a new Rental Asset Management & Performance (RAMP) product to provide a range of surveillance analytics for the single-family rental industry, being used by both SFR investors and originators. The examples are endless of how we are creating and acquiring new technology and coupling it with our experienced team of professionals to timely address our clients’ needs and requests.

Q: What excites you about our industry right now?

A: There are a lot of new opportunities, allowing us to create more innovative solutions. In the course of a few short years, we’ve seen the SFR market move from a small-investor market to an institutional asset class and Clayton and Green River were leading the way to provide component services for this new industry. Over the past year and a half, SFR securitizations have gone from zero to over $11.3 billion of issuance and all have been supported by Clayton and Green River component services.

The next generation of these deals — multi-borrower transactions — is already here. And given the challenges these deals present — a diverse pool of borrowers in terms of size, financial strength and sophistication; a variety of loan terms and types; hundreds of investors and properties in a single deal that may have hundreds of variations of reporting systems, etc. — there will be a need for a third party in the deal to aggregate the information, process, underwrite, and value the properties and then credibly report out to the trustee, the servicer and, ultimately, the bondholders. We’re already working with lenders, ratings agencies and warehouse providers to fill this role and no other firm in the SFR space has Clayton and Green River’s skills, experience and technology.

Finally, I can’t help but be excited about the significant impact Clayton and Radian are having on the future of the mortgage industry. We’re discussing ways to jumpstart the PLS market with a cross-industry team, we’re actively redefining how our industry responds to regulatory and compliance challenges through our technology offerings and continuing to enhance due diligence and underwriting services that have always defined the Clayton brand. It’s an exciting time in our industry and a terrific time to be at Clayton. We’re making a real difference for our clients, our employees and our industry.