What It Is

The DXM platform is an innovative technology built with artificial intelligence and expert knowledge as to how mortgage securitizations can be optimized. DXM can uniquely benefit banks which originate or retain mortgages, investors including insurance companies, money market mutual funds, pension funds, etc. that want to invest in mortgage backed instruments, and the Federal Reserve to help liquidate some of its mortgage backed security assets. DXM can also be used by broker/dealers who participate in the securitization of mortgages.

Integrated Framework Components
Uses enhanced rate swap to uniquely split funding component, interest rate risk, prepayment risk, and credit risk from many mortgage instrument.
Multiple transformative applications that address complex balance sheet and risk adjusted return problems for commercial banks, asset managers, mutual funds, and even the FED.
Legal, Accounting and Regulatory Framework
Generates strategies that are in compliance with Dodd-Frank, ERISA, BASEL 3, and FASB hedge accounting.
How It Works
DXM Securitization Transaction Steps
Bank identifies fixed-rate mortgages in a “Held for Sale” account. These mortgages could be seasoned, newly-originated or acquired from its correspondent network.
Bank sells mortgages to Special Purpose Vehicle (SPV) established by a third party, (e.g. investment bank, credit REIT, etc.)
A Mortgage Swap is embedded inside the securitization on the senior tranche and executed with the bank or the originating bank (bank receives fixed rate and pays 1-month floating rate).
The Mortgage Swap splits the interest rate, prepayment and credit risks from the senior tranche, creating multiple instruments: an interest rate swap and a prepayment hedge with no credit risk and a floating-rate security with only tail credit risk.
Investors give cash to the SPV which in turn gives it to the originating banks.
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