Matthew E. Gold, a trader and mortgage buyer with Bayview Financial Trading Group, said the hour or two he spends each day dodging sales calls from bond salesman and bankers have become his most productive.
Mr. Gold devotes this quiet time to searching the Internet for good buys on whole loans. He estimates that 75% of all his business now hails from cyberspace.
Mr. Gold-officially an acquisitions manager for the capital markets division of Miami-based Bayview-is part of a growing group of mortgage buyers and sellers who turn to the Internet for help in trading whole loans and mortgage-based securities.
For whole-loan trading he uses a system from Pedestal Capital Inc., a mortgage brokerage firm. Pedestal's Internet system was created by its 36- year-old president, Yung C. Lim, who has 12 years of experience in the mortgage industry.
Pedestal's Web site was constructed for institutional investors, portfolio managers, and traders. The system handles conforming and nonconforming residential mortgages that range in credit quality from A to D.
The Web site lets users bid on whole loans, and also provides analytical tools and research information to help them make informed decisions.
Pedestal chose to create a Web site focused on the whole loan niche because the market is fragmented and requires less dealer participation, Mr. Lim said.
The trading of whole loans requires large amounts of data about collateral. The Internet-based system gives users quick access to such information, Mr. Lim said.
By providing access to its system at no charge, Pedestal hopes to attract more clients and to ultimately expand beyond residential mortgages.
Mr. Lim said he also hopes to find opportunities to broker foreign mortgage-backed securities and attract overseas investors to the U.S. market.
To make the system user-friendly, Mr. Lim and his team created a stratification tool that helps users better understand what they are buying. The system lets a potential buyer dissect collateral and view cross-sections of the entire loan portfolio, he added.
In addition, the option-adjusted-spread model for pricing options in mortgages is one of the key selling points for the Web site, Mr. Lim said.
"I saw the opportunity of utilizing the latest information technology and applying that to the mortgage-backed industry," said Mr. Lim.
Because mortgage products are more complex than many other fixed-income products, they are well-served by technology that gives users ready access to analytics.
Several large broker dealers on Wall Street use the system, but smaller brokerage firms that do not have the wherewithal to build their own analytical tools are perhaps best served by it, said Mr. Lim.
"It provides me with a concise layout and format of exactly what I'm looking for," said Mr. Gold of Bayview.
Another user of the system, Stewart Zimmerman, executive vice president in America First Co.'s New York office, said he likes the anonymity the system allows for.
Robert E. Powell, senior whole-loan trader at Havenwood Financial in Owings Mills, Md., called the site "a good gauge of where investors and others are pricing their pools. It's a good way to track the market."
