MountainView Financial Solutions, a Situs company and a leading advisor to the financial services industry, announced Monday that it has expanded its asset valuation solution to include Enhanced Daily Marks for a range of hard-to-value Level 2 and Level 3 assets. We interview Chris Kennedy, Managing Director, to learn more about the solution.
Q: MountainView has traditionally provided valuation services on a monthly or quarterly basis. Do the company’s current clients need more frequent marks?
A: Yes, that is correct. MountainView already provides monthly or quarterly marks to a range of institutions such as hedge funds, mutual funds, REITs, banks, credit unions and investment advisors. We’ve found that many of our clients have grown to appreciate the depth and granularity of our solution. As a result, we’ve had more and more requests for daily pricing, especially on hard-to-value assets such as Marketplace Lending (MPL) and Residential Real Estate and Commercial Real Estate (CRE) whole-loans.
It isn’t often that you find a valuation provider that can give clients a deeper understanding of the valuation process at a daily frequency, but MountainView has the talent, sophistication and capability to offer this to the industry.
Q: Your daily pricing solution is called the “Enhanced Daily Marks.” Does this mean it is different from other daily pricing solutions? How so?
A: Most large pricing services won’t price these hard-to-value, illiquid assets. Moreover, many valuation providers will deliver the final determination of value as a number, and provide limited reporting and explanation about the details underlying inputs and assumptions used. The industry has simply gotten used to paying for a solution that lacks transparency of assumptions behind the mark. The result is that the client pays for a report that is remarkably difficult to defend internally and externally to investors and auditors.
MountainView not only provides a sophisticated and in-depth analysis, but it delivers an intuitive report that allows the user to explain the results to stakeholders. But this approach is typical of MountainView. We’ve priced these types of assets for 15 years, delivering high-quality, detailed assumption information and clear transparent pricing. Now, we simply take what we do on a monthly basis and push it down to daily.
Q: What types of assets do you provide daily marks on?
A: We are really known for pricing hard-to-value assets. Right now, we are seeing a lot of interest in daily marks for MPL loans as there is some uncertainty about the stability of these assets because platform lenders typically rely on automated underwriting algorithms. Frankly, the market is priced for perfection and loss assumptions have been too optimistic, which has made it even harder to model the investment. More frequent and detailed valuations may drive greater price and loan performance transparency in this space.
Additionally, potential economic uncertainty is prompting clients to request daily marks on structured finance securities. Since the market dynamics are difficult to pin down, the daily marks offer a tool for clients as they make investment decisions on residential real estate and commercial real estate whole-loans, MPL loans, asset-backed securities (ABS), residential mortgage-backed securities (RMBS), commercial mortgage-backed securities (CMBS) and collateralized loan obligations (CLO).
Kennedy added that while economic uncertainty is clouding loan and structure finance securities investment decisions, MountainView’s Enhanced Daily Marks serve as a pulse check. To read the full press release on the MountainView website, visit http://mviewfs.com/news.html or contact Chris Kennedy firstname.lastname@example.org to request more information about Enhanced Daily Marks.
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