Mortgage pipeline hedging software

More from Community More posts in Community ». Interest Rate Risk. First Party Debt Collection. More from Management More posts in Management ». To reduce market risk and make more loans, it is common for institutions to sell groups of mortgages to a purchasing agent such as Fannie Mae or Freddie Mac. These government sponsored entities GSEs package the loans with like mortgages for sale in the secondary market.

Why hedge the mortgage pipeline? Managing the pipeline is a critical part of mortgage lending that calls for skilled management to keep risk under control and ensure profitability. Hedging is often used to offset risk and increase efficiency, but it can be confusing — even daunting — to some because it involves complex computations and the use of models to manage risk and determine pricing.

Yet, when done right, hedging strategies may offer lenders more selling flexibility, greater efficiencies and the ability to hold loans on the balance sheet longer — all leading to potentially higher returns. When you search for a hedge advisor, you want to make sure they are a one-stop-shop.

An excellent hedge advisor will provide additional services to lenders including MSR services , rate sheets, lock desk, and much more. You can use the helpful checklists below to ensure you have all that you need to grow into a full-service capital markets department. Additionally, a hedge advisor with a lock desk will have a greater perspective on improving your secondary department processes because they will be aware of the industry-standard best practices for rate lock workflows. Partnering with a hedge advisor for lock desk services, in addition to hedge advisory services, will also make your onboarding process much more efficient.

Sometimes you can even begin working with a hedge advisor as a lock desk client to help expedite your ride to mandatory executions. Through outsourcing partial or all of your lock transactions, you allow the hedge advisor to get to know your business. The hedge advisor will, in turn, help you determine what you need to move to mandatory and aid you in that transition through this avenue of service.

Is your hedge advisor continuously being innovative and keeping up with available API integrations? Partnering with a hedge advisory that is a pioneer of technology and integrations is the key to having the edge over your competition in the secondary market. Look for a hedge advisor that is innovative and consistently breaking new ground. The digitization of the secondary market is developing at rapid speeds.

An API, also known as Application Programming Interface, is a software intermediary that allows two applications to talk to each other. APIs are the way of the future. The more API integrations a hedge advisor has within their loan pipeline management software, the more seamless your experience will be when you transact business with correspondent lenders during your day-to-day business.

This will save you more time and money as time goes on. Government-sponsored enterprises GSEs , also known as agencies Freddie, Fannie offer integrations to bring more efficiency, value and added profitability to their sellers. A great hedge advisor should take full advantage of these integrations to help their clients. The automation that API integrations provide reduce market risk through real-time executions. They also reduce input errors by seamless data entry and save time improving efficiencies for lender clients.

Technological advances in the secondary market save lenders in many ways. For example, lenders save BPS by assigning trades to investors and avoiding pair-off fees with assignment of trade technologies. Getting Started Request a quick introductory call to learn more about our Hedge Advisory services and software.

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