Rocktop Technologies: The Fintech Solution To Risk Management

Brett Benson, President and Chief Investment Officer In the residential mortgage industry, innovation has typically revolved around the origination of loans, with only a minor focus on post-origination activity. Default servicing processes, in particular, are antiquated and have remained unchanged for decades. Slow, manual, paper-driven tasks continue to be the basis for trading, origination, and servicing of financial assets.

Rocktop Technologies is changing the status quo with its robust solutions.

Rocktop codifies the risk assessment and automates process workflows to drive efficiency in managing mortgage assets. Sophisticated machine learning functions enhance predictive power to understand borrower behavior and the duration and cashflow paths important to investors. Structured data is constantly ingested, validated, and used to inform key surveillance functions. These analytic outputs drive decisions, including operational triggers used in key asset management processes and capitalmarket decisions, such as hedging, securitization, and loan sales that assist in service optimization.

“Most tech organizations are designed to address specific process inefficiencies,” says Brett Benson, Rocktop’s president and chief investment officer. “We take a different perspective by addressing the fundamental misalignment that affects returns for our clients.”

Focusing on Data Ingestion

Rocktop’s primary focus is on data ingestion—cleansing and validating data by triangulating it from multiple sources. This is paramount to setting an appropriate foundation for risk assessment.

Once the data is structured and organized, Rocktop sets out to prioritize key risks. Its proprietary platform systematically creates depth and consistency in the risk identification task. The company looks through a legal lens to determine the risk of loss to the investor.

The platform houses internally developed logic trees that translate and rank the risks. These risks are compartmentalized and then layered to output grades at the asset and underlying issue levels. Categorically, risks are determined for compliance, collateral, property, title, and legal.

Once the risk assessment is determined at the issue level, Rocktop’s platform interfaces output descriptions and instructions to operational groups. The standardization and depth of the diagnosis result in consistent and efficient curative functions with a direct impact on timeline management—the key to optimizing economic outcomes. Rocktop refers to logicdrivendesignations as terminal nodes that trigger workflows by efficiently sending the prescribed instructions to operational groups as action items.

Post transfer of the assets, Rocktop’s automated process ingests thousands of structured and unstructured data fields, including servicing comments, on a daily basis. As a result, clients are informed about ongoing surveillance processes.
In addition, the dashboard reporting interface allows Rocktop’s research and management teams to dig into summary and asset-level reporting functions that allow for more efficient segmentation of portfolio cohorts.

Painting a Complete Risk Assessment Picture

Rocktop has built its internal proprietary platform with layers for data management, automated workflow, data integration, and reporting.

Rocktop’s integration pipes exist between thirdparty data vendors to support data validation and deepen the available data sets needed to paint a complete risk assessment picture. Licensed data is also piped into internal data lakes to be used for modeling and to provide depth during a front-end bid analysis on a pool of assets.

Another differentiation in Rocktop’s data management approach is the use of proprietary data that the company has accumulated over the years. The aggregation of this data, with curative resolution paths for over 100,000 legal-driven issues, provides the ingredients for the prescribed solutions and instructions. This data bank creates a significant moat for competitors, as it is not available in the market. The use of this proprietary data, in large part, informs the deterministic risks identified as part of the diligence function.

Ultimately, the translation of risks comes in how the company predicts and models the forward performance and expected cash flow stream of the respective assets. Next, its internal data science team creates proprietary cash flow engines with borrower/asset propensity modeling to absorb and translate risk.

Increasing Yield for Clients

Rocktop’s platform allows for the efficient absorption of massive disparate data sets, enabling business analysts and legal experts to research and draw boundariesaround operational processes. The platform’s interactive dashboards allow for filtering and visualization of the population to marry legal risks with process inefficiencies and impediments. It also tracks portfolio performance and advises clients on optimized liquidation strategies based on the duration and return profile of clients.

Apart from layers for data management, automated workflow, data integration, and reporting, a secondary module was designed for Rocktop’s data science-powered applications with additional data pipeline management and predictive modelling capabilities. There are detailed, stored procedures designed to effectively automate more than 90 percent of the due diligence process with respect to a target asset. This up-front risk assessment, complemented by Rocktop’s legal infrastructure, creates differentiation.

Once the risks are appropriately identified and prioritized, instructions are put out to both the capital markets and operations groups to cure, price, or remove the asset to align with the investor’s risk and duration thresholds. This continues postpurchase through the life of the asset for optimal execution of the portfolio to increase yield for Rocktop’s clients.

Offering In-Depth Analytics

Rocktop has always maintained a streamlined operating budget and people-light infrastructure to quickly adapt to changing markets while leveraging third-party data and analytic product output to add depth to the analytics.
This allows the company to enhance model output with commoditized analytic output, e.g., aerial imagery, todetermine property issues, housing price direction, and volatility.

The Connection Of Data Science And Technical Automation Driven By Rocktop’s Capital Markets And Legal Expertise Has Created Scale With An Ability To Shift Quickly Into Different Asset Classes

“Outside partnerships to test analytic theories allow us to focus on what we do best— providing our clients insight and strategy on opportunistic assets with an ability to protect downside risk and create alpha,” says Benson.

“Outside Partnerships To Test Analytic Theories Allow Us To Focus On What We Do Best—Providing Our Clients Insight And Strategy On Opportunistic Assets With An Ability To Protect Downside Risk And Create Alpha”

Rocktop takes pride in having an innovative culture that prioritizes data, analytics, and technology-driven solutions. Its technical skill and cross-pollination of expertise in a matrix-like structure promote groups to work together on solutions.

Streamlining the Process and Ultimately Increasing Investor Returns

One of the primary industry misalignments that Rocktop addresses is the inability of third-party law firms to manage legal costs that directly impact returns to clients. They assess and remediate risks like title curative and foreclosure actions—typically billed on an hourly basis with no certainty as to time or ultimate cost. Rocktop has solved thismisalignment by automating the assessment of risks and identifying the resolution path best suited to address the issue in an efficient and cost-effective manner. Data validations create a clean front-end process and an efficient diagnosis of the problem with standardized instructions to resolve the issues that create inefficiencies.

“The connection of data science and technical automation driven by Rocktop’s capital markets and legal expertise has created scale with an ability to shift quickly into different asset classes,” says Benson.

Rocktop will continue to work toward addressing the identified market inefficiencies and streamlining data validation processes. The company also has expertise in deeper analytics around borrower behavior and property value direction and volatility. Deploying deeper analytics around these elements allows for more transparency and isolation of risks specific to an asset class.

“Digitization of assets is ultimately part of the evolution of the industry. Rocktop is at the forefront of this disruption,” says Benson.

Rocktop Technologies

Irving, TX

Brett Benson, President and Chief Investment Officer

Rocktop Technologies is a multidisciplinary ecosystem of computer scientists, data analysts, futurists, innovators, mainstream outliers, and legal specialists. They develop and deploy cuttingedge machine learning and AI-powered apps that transform how risk is rated and managed. Its unique blend of culture and inventiveness allows users to identify and manage even the most severe risk characteristics across huge credit portfolios

Rocktop Technologies