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Special Reports
Secondary Market
Lydian Data Services Purchases WellFound Decade
By Anthony Garritano
Combine the integration, architecture and data extraction capabilities of WellFound
Decade and the secondary market clients and services of Lydian Data Services and you get a company that could very
well take the secondary market into a more electronic world.
Right now, the secondary market is ripening for electronic mortgages with Fannie
Mae and Freddie Mac both in the game. However, it has been speculated that the GSEs may get a little competition
from Wall Street investors stepping up as well. Lydian Technology Group, the new name for WellFound, is primed
to bring Wall Street investors to the mortgage industry.
While WellFound Decade has been very public in the mortgage space re-architecting
legacy systems muddled with point-to-point interfaces for large lenders to service-based enterprise systems that
leverage Web services, MISMO and SOA to future-proof their enterprise for the current competitive landscape, Lydian
Data Services has gone under the radar for the most part. Lydian Data Services offers end-to-end outsourced solutions
with a specialty in conduit services and closed-loan review for top mortgage aggregators and Wall Street companies.
The marriage of these two companies will allow Lydian Technology Group to "reduce
the fragmentation by doing data normalization," said William Decker, chairman and CEO of Lydian Data Services.
"We've had to normalize the data for our institutional investor clients for some time now. WellFound Decade
is a step ahead in their ability to do data extraction. We can now be a receiver of the data and WellFound Decade
can go out and get that data to us."
As part of the merger, Brian Fitzpatrick, WellFound Decade's president, and Paul
Gain, the CEO of WellFound Decade, will retain their positions within Lydian Technology Group. A purchase price
was not disclosed.
"We came out with InvestorExpress to speed up the transference from the seller
to the investor," said Mr. Fitzpatrick. "Lydian Data Services has created an outsource group because
when a seller is going to sell a loan to a Wall Street investor, the loan has to be looked at for compliance, underwriting,
program guidelines, etc., before the investor commits to the purchase and puts it into a securitization."
"Lydian has been providing all that data scrubbing and services for several
Wall Street institutional investors," he said. "They saw that we at WellFound Decade have the data side
of the transaction and that their clients also need better architecture from an infrastructure perspective."
"This merger with Lydian Data Services empowers us to extend our reach in
the marketplace," added Mr. Gain. "Lydian is a nationally recognized financial services company with
over $1.6 billion in assets. Through this combination, the newly formed Lydian Technology Group will provide companies
the critical link between data and services, offering clients a new level of service and integration."
"We bought out the remaining shareholders, except Brian and Paul who are
now shareholders in our company," said Mr. Decker. "The mortgage market is highly fragmented. There are
200 classes of documents for example. Right now we can image and auto classify 54 classes of documents with 99%
accuracy. We can take a loan file, stick it into our imaging system, clean it up, enhance it and run our classification
engine to verify what each document is and why it's there.
"We've also been working on data extraction to create templates to extract
the data out of the image to populate due diligence and origination systems," he said. "We have add,
delete and hide features so the client can ingest the file and build it along the process.
"The other side is that we can get electronic data to pull data from origination
and servicing systems to efficiently run analysis to generate information on compliance, on program and product
eligibility, on missing documents, etc," Mr. Decker explained. "What we're trying to do is create an
efficient process to allow secondary market transactions to go on and make origination more efficient as well.
Going forward, we can leverage WellFound Decade's infrastructure to allow us to access external data, bring it
in and put it in a common data representation for Wall Street investors and other clients."
Both companies will continue to operate independently while embarking on an integration
path to allow both sets of clients to gain the advantages each brings to the table.
"The nice part is that you can marry the physical document with the data
to make for an efficient secondary transaction," said Mr. Decker. "We have relationships with a lot of
large Wall Street investors that we can push this data to. We will make it easier for originators to process loans
so they can send them to us, we'll auto classify them to build virtual files and send it along to the large investment
banks that we deal with. So, there's a real blend in our client bases that allows us to create a seamless overlap."
"This is a validation of our entire business model," added Mr. Gain.
"Ultimately we'll have an end-to-end process that accommodates all of those applications and connects to Wall
Street."
"WellFound Decade's view has always been to make the process more efficient,"
said Mr. Fitzpatrick. "The first step is that Lydian Data Services is implementing the WellFound Decade technology
internally to bring more efficiency to their clients to create better process. At the same time we're allowing
the WellFound Decade clients to have access to services and clients that Lydian Data Services has."
"We want to reduce the fragmentation by doing data normalization," said
Mr. Decker. "We've had to normalize the data for our institutional investor clients for some time. WellFound
Decade is a step ahead in their ability to do data extraction. We can be a receiver of the data and WellFound Decade
can go out and get that data to us."
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