blueprint for a Mortgage OLAP Network & Financial Warehouse by Evince Technologies, Inc. by Evince Technologies, Inc.

What is the Mortgage Lifecycle? Origination Providing Funds Closing Servicing Securitization -Pooling and packaging loans into securities, which are then sold to investors Trading -Price, sell, and trade mortgages in international markets

The Objective Create and support the Mortgage Lifecycle Streamline every step of the workflow by gathering participants in a mutual network Leverage economies of scale secondary market Provide a secondary market for residential mortgages to guarantee the flow of consistent, affordable funding thru a mortgage delivery system Install the foundation of a financial warehouse (data warehouse), not only to monitor the existing mortgage markets and analyze risks, but to anatomize and scrutinize the financial markets in general, to catch early trends and foresee upcoming economic waves Provide means to plug-in custom statistical models to the above financial warehouse, to generate custom scoring, risk Accomplish all of the above by using open-source technologies, without any dependency to existing monopolies; facilitate complete technology sharing and ownership

A Mutual Network Process driven (not business-department driven) Consumer oriented (not firm-oriented) Automated and collaborative (not paper-based, nor competitive) Adaptable (not legacy) Reengineered business-processes, adaptable in changing consumer preferences Embracing emerging international standards Such a network must be:

In the World… Debt markets have been expanding (Development of securitization, with an increased share of debt instruments becoming actively traded) Derivatives markets have been expanding (Allowing firms to trade market risks more efficiently) Economies of scale in financial services have been increasing (specifically among banks, due to loosening restrictions on geographic and product markets) Risk assessment techniques are adopted (scoring, credit evaluation, delinquency evaluation, statistical models are integrated) Internet utilization is increasing (growing share of customers accessing information and executing transactions online)

Securitization Securitization, –packaging and trading loans as securities– is an increasing and ever more profitable trend

Mortgage Backed Securities Mortgage-backed securities (MBS) are debt obligations that represent claims to the cash flows from pools of mortgage loans, most commonly on residential property. Mortgage loans are purchased from banks, mortgage companies, and other originators and then assembled into pools by a governmental, quasi-governmental, or private entity. The entity then issues securities that represent claims on the principal and interest payments made by borrowers on the loans in the pool, a process known as “securitization”.

Capitalism 101: The Bigger, the Better?  Automation of mortgage lending has facilitated significant consolidation among mortgage originators. The market share of top 10 firms rose significantly.  The value of a network significantly increases by the number of people connected to it.  Networks allow easier entry into and exit from markets, and permit firms to compete in new ways.

Retail versus Purchased Loans Another explanation for the consolidation trend is the growth in purchased production, which has been facilitated by technology. As the share of purchased production by the firm increases, the cost per loan- produced decreases. “Securitization” increased the liquidity of mortgages, and made it easier for lenders to split, ‘unbundle’, the segments of lending process; leading to vertically disintegrated model of lending. As in, originators, brokers, servicers, insurers, secondary market traders (MBS investors).

eMortgage Fully electronic mortgage transactions Paperless – not imaged paper (eDocuments) Electronic signatures (eSignature) Data + View Identify electronic originals vs. copies (eVault) Not necessarily – only Note must be electronic Note Registry (MERS® eRegistry) Storage Compliance

Smart Doc Concept Securable Manageable Archivable Retrievable Transferable headeraudit trail view datasignatures document type & other info history of events what parties see & sign (mapping of template to data) actual data digital signatures Type: 15-year fix Rate: 6.75% 15FR 6.75

M I S M O Market Flow CONSUMERS primary market INVESTORS secondary market Banks Credit Unions Mortgage Co Finance Co PMI realtor property insurance mortgage broker appraisers title notary origination risk assess service financial warehouse IMKB Fannie Mae Freddie Mac Other MBS

investor delivery servicing post closing automation gap closing Process Flow processingapplication apply supporting docs preview docs signing mortgage payments disclosurese-sign?? consumer B2C lender B2B vendor underwriting credit appraisal / insurance / title settlement agent order services decision order closing TAPU closing package lien release TAPU investor

Application Architecture datamart data Vertical partitioning (application silos) web servers, application servers ….. web clients …. LOAD BALANCING data warehouse access control layer

Financial Warehouse ….web nodes…. asynch message queues event processors local DBs & DSS batch queues presentation layer data warehouse BI Bus partitioned warehouse distributing data mining & consolidation DSS feedback

Procedures Highlight any procedural differences from regular projects of this type Discuss requirements, benefits, and issues of using new procedures FOR MORE INFO... List location or contact for procedures document (or other related documents) here

Schedule Review high-level schedule milestones here FOR MORE INFO... List location or contact for detailed schedule (or other related documents) here JanFebMarAprMayJunJulySepOctNovDec Phase 1 Phase 2 Phase 3

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