Incenter is adding a third-party due diligence review firm to its umbrella of companies.
Edgemac, which Incenter acquired at the end of last year, does due diligencing for mostly non-QM and jumbo loans, as well as private label reverse mortgages that could eventually be securitized. The firm, founded in 2008, also provides document management services for closing, purchase, sale and securitization of residential and business-purpose mortgage loans.
Edgemac and Incenter declined to disclose terms of the transaction.
Edgemac’s clients span banks, investment banks, Trustees, investors, government entities and mortgage companies. Its due diligence process looks at a loan from soup to nuts, verifying whether an appraisal is conducted properly, or making sure a loan meets the ability to repay standard.
Edgemac assesses whether the loan can be securitized after the loan is closed. Lenders can then receive a “reliance letter,” which allows them to securitize the loans more quickly.
Robin Auerbach, president and CEO of Edgemac, said that in light of rate hikes and compressing margins, lenders are especially interested in ways to shift some processes — such as document management — to another party.
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“Lenders are in a tough spot this first quarter,” Auerbach said.
Auerbach also said that being part of the Incenter umbrella of companies would allow Edgemac to draw upon expertise from Incenter’s other brands.
“This will compliment what we do and allow us to continue to provide more services to existing and new customers,” Auerbach said. “We’re different companies, but when customers ask us to engage someone else from our counterparties, we do not have to recreate the wheel.”
Edgemac will be the 11th company acquired by Fort Washington, Pennsylvania-based Incenter, which offers an array of services related to mortgage, including appraisal management, property tax analysis and trading and advisory services for mortgage servicing rights.
Rising rates tend to pull the value of mortgage servicing rights up with them, as the risk of mortgage prepayment declines. Mortgage rates are already on the rise, and despite being dampened in the short term by the conflict in Ukraine, will likely rise further as the Fed takes steps to reduce inflation.
The MSR market is already flourishing, as lenders with MSRs on their balance sheet cash in on more favorable pricing. Bruno Pasceri, president of Incenter, said that Incenter is “well-positioned” to help institutions capitalize on the active MSR trading, securitization and purchase markets.
“In an industry that is always balancing the competing needs for agility and risk management, Edgemac’s services are a welcome addition to Incenter’s offerings,” said Pasceri.