The Debt Exchange, better known as DebtX, is drawing national interest from investors seeking to buy loans, including distressed commercial mortgages.
“What we're doing is a marketplace, so we're not providing capital, we're enabling capital to get to the product,” says Kingsley Greenland, president and CEO of Boston-based DebtX.
“It's a place where people can conduct business in a regular and cohesive manner,” he says. “We think of it as an exchange.”
The company also determines values for loans based on market conditions. “We price over $800 billion of commercial real estate mortgages a month. That's an astronomical number,” says Greenland.
DebtX has more than 6,000 registered investors and 300 selling institutions that range from commercial and investment banks to insurance firms and government-sponsored enterprises.
Besides providing the online marketplace and information on loan values, the company markets loans and assets to potential buyers through aggressive e-mail and telephone campaigns. For instance, the firm has marketed commercial real estate and other loans for a regional bank with $52 million in assets.
“We package, we market and we underwrite the loans. We go through extensive exercises to make sure that all the data is in a consistent format for buyers so they can get through more data more quickly,” says Greenland.
When lenders approach DebtX for help in selling non-performing or distressed loans, company and client must reach an agreement on price. “We don't take any assets to market unless we agree on price because we believe [an inappropriate price] damages the buyers,” the CEO says.
The Federal Deposit Insurance Corp. is a big customer, and often uses the service after liquidating a bank, says Greenland. Going forward, he expects the business to expand as more investors hunt for bargains.
DebtX has invested a great deal of time and effort in technology to provide buyers and sellers with information on loans and values through its Web site, www.debtx.com, Greenland says. “We sell more [online loans] than anybody so we see what's happening in the market.”