MortgageIT — Investor Presentation (December 2006)
52 slides from MortgageIT's investor presentation, Dec 5, 2006
Slide 1: MortgageIT Holdings, Inc.
Mortgage | HOLDINGS, INC.
Slide 2: Disclaimer
Disclaimer The information contained herein has been prepared solely for informational purposes and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any trading strategy. Any offer of securities is and shall be made pursuant
Slide 3: Corporate Overview
Corporate Overview Mortgage’
Slide 4: MortgageIT overview
MortgageIT Mortgage REIT headquartered in New York City, with approximately 2,100 employees in 46 branches located throughout the United States Mortgage REIT headquartered in New York City, with approximately 2,100 employees in 46 branches located throughout the United States Completed Initial Publi
Slide 5: Leadership Team
2 Leadership Team Industry Ep Yearswith Name Position MHL Background ae se az Se Cofounder, Mortgage; Co-ounder, 1 ‘Doug Nisa Chiet Executive of 18 18 es Mone Gary Hterkiend President (TRS) 4 4 Managing Ciectr, IP Skysoraper President BNY Mortgage, President Priceline Porch MoGnerny Chief Opening Or
Slide 6: Company history and milestones
IPI formed as a mortgage broker July 2004 IPO raised $175 million and created MortgageIT Holdings, Inc. MortgageIT founded; wholesale lending platform (MIT Lending added later) Launched securitization program: $810 million in Sept. ’04 and $635 million in Nov. ’04 Securitized $4B during 2005 across
Slide 7: Top Mortgage Originators in 2005
Top 30 Mortgage Originators in 2005 Source: Inside Mortgage Finance
Slide 8: Consistent Origination Growth Underpins Company Performance
Consistent Origination Growth Underpins Company Performance Industry Quarterly Y/Y Growth (%) MortgageIT Quarterly Y/Y Growth (%) Source: Mortgage Bankers Association and MortgageIT
Slide 9: Growing Footprint Diversifies Risk
Growing Footprint Diversifies Risk > $100 mm > $100 mm $50 mm to $100 mm $25 mm to $50 mm 3Q:06 Fundings W (7) W (3) W (2) W W W W W W W R (7) W W (2) W R W R CL W W W (2) Corporate Headquarters Corporate Headquarters R Retail Origination Office W Wholesale Operations Center W W W W W W W
Slide 10: Balanced and Diversified Lending Maximizes Adaptability
Balanced and Diversified Lending Maximizes Adaptability Conforming Government Jumbo Home Equity/ Home Equity/ Sub- Sub- Alt A Correspondent Retail Wholesale Pay Option ARMs 32.6% Based on 3Q:06 funding mix by volume
Slide 11: Recent Financial and Operating Highlights
Recent Financial and Operating Highlights Gain on sale for the Company’s prime business was 102 bps for Q3 2006. Gain on sale has ranged between 70 and 107 bps in prior 5 quarters. Gain on sale for the Company’s prime business was 102 bps for Q3 2006. Gain on sale has ranged between 70 and 107 bps i
Slide 12: Origination Philosophy
Origination Philosophy Mortgage’ 12
Slide 13: Whole loan sales business model discipline
MortgageIT was built on the tight disciplines required of a “whole loan sales” business model Investor Review provided timely and immediate feedback on loan quality Investor Review provided timely and immediate feedback on loan quality Additional pre-sale due diligence performed by loan buyers. Depe
Slide 14: Underwriting Personnel
Underwriting Personnel Mortgage’ 14
Slide 15: Experienced Underwriting Staff
Experienced Underwriting Staff MortgageIT historically maintains a high percentage of experienced Level 4 underwriters on staff. This will further ensure that the company is focused on responsible decision-making determinations when evaluating a borrower’s credit worthiness and ability to repay obli
Slide 16: Credit Authority Level (Formerly Jr. Underwriters)
Credit Authority Level 1 (Formerly Jr. Underwriters) Experience Experience 0-1 yr, Basic Knowledge of financial techniques and loan file documentation Basic Function Ability to submit AUS to $500,000 (underwriter to approve) Cannot approve or decline loan files Assist underwriters Sign off low risk
Slide 17: Credit Authority Level (Formerly Level 1)
Credit Authority Level 2 (Formerly Level 1) Experience Experience 1+ yrs Basic Function Underwrite up to Agency Conforming Loan Balance only Cannot combine second signature to underwrite loans > conforming loan balance Industry Knowledge Agency guidelines Appraisal Review Compliance Loan Types/Produ
Slide 18: Credit Authority Level (Formerly Level 2)
Credit Authority Level 3 (Formerly Level 2) Experience Experience 3+ yrs Basic Function Single Signature: ? to $650,000 Second Signature: $650,000 < to ? $800,000 Industry Knowledge Self-employed borrower analysis Advanced appraisal analysis (2-4 units) Compliance Loan Types/Products All Conventiona
Slide 19: Credit Authority Level (Formerly Level 3)
Credit Authority Level 4 (Formerly Level 3) Experience Experience 5+ yrs Basic Function Single Signature: ? to $800,000 Second Signature: $8000,000 < to ? $1,000,000 ( >$1M with second signature of Regional/National Credit Manager only) Industry Knowledge Highest proficiency at all levels of Mortgag
Slide 20: Credit Authority Cont'd
Credit Authority Cont’d Operations Managers Operations Managers Second signature behind Level II or III underwriter only, up to $650,000 Clear or waive (not delete) underwriting conditions Cannot be underwriter of record. Second Signature only MI Contract Underwriters Single or Second signature maxi
Slide 21: Underwriting Processes and Quality Control
Underwriting Processes and Quality Control
Slide 22: Originating High-Quality Loans
Originating High-Quality Loans
Slide 23: Originating High-Quality Loans
Originating High-Quality Loans
Slide 24: Pre-Funding Processes to Ensure Loan Quality
Pre-Funding Processes to Ensure Loan Quality Selective re-processing and validation of loan data prior to funding. Selective re-processing and validation of loan data prior to funding. Credit authority granted under well established parameters to experienced staff. Credit authority granted under wel
Slide 25: Pre-Funding Processes to Ensure Loan Quality, Cont'd
Pre-Funding Processes to Ensure Loan Quality, Cont’d LoanIQ assesses overall transaction risk, based on numerous property characteristics and is required on all transactions intended for bulk sale. Credit reports are re-validated on all third party originated transactions. Custom Identify Verificati
Slide 26: Pre-Funding Processes to Ensure Loan Quality, Cont'd
Pre-Funding Processes to Ensure Loan Quality, Cont’d Identifies violations of federal state and or local high cost regulations. Uses standard loan data to perform section 32, HOEPA, and TILA tests. System will integrate with DataTrac allowing 100% of loans to be entered through the system at time of
Slide 27: Originating High-Quality Loans
Originating High-Quality Loans
Slide 28: Post-Funding Processes to Ensure Loan Quality
Post-Funding Processes to Ensure Loan Quality All loans subject to a data, legal and compliance review with-in 7 days of funding. All loans subject to a data, legal and compliance review with-in 7 days of funding. Loan Investigation Department reviews investors due diligence reviews, repurchase requ
Slide 29: Originating High-Quality Loans
Originating High-Quality Loans
Slide 30: Quality Assurance
Quality Assurance Provide timely and targeted qualitative feedback on the soundness and reasonableness of underwriting judgments Provide timely and targeted qualitative feedback on the soundness and reasonableness of underwriting judgments Quality Assurance samples are taken of the broad originated
Slide 31: Originating High-Quality Loans
Originating High-Quality Loans
Slide 32: Quality Control
Quality Control Revalidation of information elements supporting the loan decision including collateral Revalidation of information elements supporting the loan decision including collateral Soundness checks of the underwriting decision Check adherence to investor and internal guidelines and procedur
Slide 33: Quality Control, Cont'd
Quality Control, Cont’d Formal feedback on the specific items are due to the QC Manager by day 75 Formal feedback on the specific items are due to the QC Manager by day 75 Outline proposed systemic remedies Monthly Summary Reports Monthly Summary Reports describe findings, action items, their resolu
Slide 34: Third Party Origination Monitoring
Third Party Origination Monitoring All broker organizations and their principals are subject to a detailed review of qualifications. All broker organizations and their principals are subject to a detailed review of qualifications. Review includes a variety of background checks including the industry
Slide 35: Originating High-Quality Loans
Originating High-Quality Loans
Slide 36: Loan Investigation Department (LID)
Loan Investigation Department (“LID”) Created to assist in the curtailment of fraudulent activity in lending areas and thus lessen the level of loss exposure to the company Created to assist in the curtailment of fraudulent activity in lending areas and thus lessen the level of loss exposure to the
Slide 37: Originating High-Quality Loans
Originating High-Quality Loans
Slide 38: Supplemental Processes: Trending and Problem Loan Analysis
Supplemental Processes: Trending and Problem Loan Analysis To provide executive management team with monthly analysis indicating problem or potential problematic areas of concern with regard to loan quality. Early payment defaults in current inventory Early payment defaults in current inventory Loan
Slide 39: Supplemental Processes: Branch Due Diligence
Supplemental Processes: Branch Due Diligence The Branch Operations Managers randomly select 10 recently funded loans each week and performs a comprehensive review on the loan file The Branch Operations Managers randomly select 10 recently funded loans each week and performs a comprehensive review on
Slide 40: Supplemental Processes: Educational Initiatives
Supplemental Processes: Educational Initiatives HUD Review Training for closers HUD Review Training for closers Mandatory classes all entry level underwriters must complete: Mandatory classes all entry level underwriters must complete: AU: Overview of Automated Underwriting E-Magic: MGIC’s AUS AU Ce
Slide 41: Guideline Highlights
Guideline Highlights Mortgage’ ry
Slide 42: Alt-A Program Highlights
Alt-A Program Highlights Source: DB Global Markets, MortgageIT OO Purch/RT 680 Fico OO SIVA/NoRatio OO Purch/RT 700 Fico 2nd Home SIVA/NoRatio OO Purch/RT 680 Fico NOO SIVA OO Cashout 700 Fico OO SIVA OO Cashout 660 Fico 2nd Home SIVA OO Purch/RT 720 Fico OO No Doc OO Purch/RT 680 Fico 2nd Home No D
Slide 43: Alt-A Program Highlights
Alt-A Program Highlights Source: DB Global Markets, MortgageIT
Slide 44: Pay Option ARMs – Product Highlights
Pay Option ARMs – Product Highlights Source: DB Global Markets, MortgageIT Product Index Min PMT Neg-am PMT Cap Recast PMT Recast Lifecap Cap Legacy 12-MTA & P&I based on FIR 115% 7.50% 5 Years FIR-full P&I 9.95% PayOption 1 Year Arm LIBOR IO loan amt X FIR/12 110% 1 and 3 New York month MTA Minimum
Slide 45: Underwriting Criteria – Pay Option ARMs
Underwriting Criteria – Pay Option ARMs Source: DB Global Markets, MortgageIT GIFTS Full Doc: 5% own funds required unless CLTV <= 80%. PRE-PAYMENT PENALTIES : DTI: Full Doc 40%; SIVA and SISA 38%; max DTI up to 45% with compensating factors. 12 months seasoning for cashout to use current value. CRE
Slide 46: Underwriting Criteria – Pay Option ARMs, Owner-Occupied Properties
Underwriting Criteria – Pay Option ARMs, Owner-Occupied Properties Source: DB Global Markets, MortgageIT 1-4 660 $1m 70/70 1-4 No Limit if LTV <= 55% 700 $2m 70/70 1-4 620* $650k 70/70 1-4* $325k if LTV > 80% 660 $1m 80/80 3-4 660 $1m 75/75 1-4 680 $1.5m 70/70 3-4 660 $1.5m 70/70 1-4 700 $2m 60/70 1
Slide 47: Underwriting Criteria – Pay Option ARMs, Investor Properties
Underwriting Criteria – Pay Option ARMs, Investor Properties Source: DB Global Markets, MortgageIT
Slide 48: Securitization Vehicle for MortgageIT Transactions
Securitization Vehicle for MortgageIT Transactions
Slide 49: MHL Collateral Characteristics
MHL Collateral Characteristics (1) Original balances and characteristics
Slide 50: MHL Performance - Prepayments
MHL Performance - Prepayments Source: DB Global Markets Research, Intex, Loan Performance
Slide 51: MHL Performance – 60+Day Delinquencies
MHL Performance – 60+Day Delinquencies Source: DB Global Markets Research, Intex, Loan Performance
Slide 52: Recent MortgageIT Aggregation Deal
Recent MortgageIT Aggregation Deal Source: DB Global Markets 50% MortgageIT + other aggregated loan packages
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