Data Specialists See Dollars in Dodd-Frank
Clayton Holdings, CoreLogic and Lewtan Technologies are equipping themselves for an increase in business triggered by the Dodd-Frank Act's securitization-disclosure rules.
Each of the companies is currently assessing its personnel needs in anticipation of future hiring campaigns. They'll need software professionals to write new programs that issuers would use to report data, along with programmers who could modify existing systems so that investors can interpret that information. There also will be openings for individuals versed in loan underwriting — people who would be tasked with ensuring that the shops are collecting the proper records.
CoreLogic is hoping to get a jump on modifications to existing software by quizzing the SEC on the types of data issuers will have to supply. It's also weighing whether those programs are adequate, and is considering buying or teaming up with another shop to fill any gaps.
Clayton and Lewtan, meanwhile, are figuring out how to create products that would help issuers meet a requirement that they supply investors with constantly updated data on each deal's payment waterfall. Some of the shops' rivals also are likely to see business grow as a result of the new rules, and sources expect some startups to appear as well.
However, any takeovers or recruiting drives won't get under way until after the SEC releases a preliminary version of the disclosure requirements a few months from now. Generally speaking, the rules are expected to mandate that issuers of most asset- and mortgage-backed bonds disclose specific details of the individual accounts underpinning their deals.
Clayton, CoreLogic and Lewtan already have products that analyze the individual loans in mortgage-securitization pools, but they don't dig that deeply into asset-backed deals. And it's unlikely that their existing programs will address all of the SEC's requirements.
The Dodd-Frank Act called for the SEC to finalize the disclosure rules by July 21, but it's unlikely the regulator will meet that deadline. A more likely scenario would see the SEC release a proposal by that date and then collect comments over several months before setting the directive in stone — with implementation following a year after that.