Walking the Tightrope
A tightrope walker must carefully consider the environment, equipment, and overall strategy to reach their target. One hasty decision could lead to a devastating fall.
When it comes to running your business, failing to carefully consider your loan and margin pricing could be akin to falling from a tightrope. As the two main profit centers (or loss centers) for mortgage lenders, your ability to calibrate loan and margin pricing will often determine your success. Just as a misstep can lead to a fall, poor pricing decisions can harm a business.
To navigate a market where mortgage lenders are losing an average $2,100 per loan, having a clear vision and a direct path is crucial.
Together, the three main components of a capital markets platform help you strategize effectively, ensuring you always walk the line regardless of market volatility.
Instantaneous Access to Accurate Pricing
Product, Pricing and Eligibility Engine
Pricing loans both competitively and profitably is a tough needle to thread, and it only gets trickier as more variables, volume, and volatility are introduced. When you add to the mix consumers’ expectations for fast, digital service, manual loan pricing methodologies become untenable.
By performing all the complex calculus for you, an advanced product, pricing, and eligibility (PPE) engine enables you to deliver accurate pricing and exceptional service while streamlining operations. Here’s how:
Accurate Pricing
PPE solutions allow lenders to offer extremely competitive pricing by evaluating thousands of loan product options – including conforming, non-conforming, jumbo, government, and portfolio products – for the best pricing. What’s more, insight into competitor and secondary pricing further dials in profitability.
Exceptional Service
Whether online or in person, borrowers expect prompt service that brings them up to speed on their options and how much they will cost. A PPE can integrate with both borrower and back-office-facing lending tools, which allows lenders to instantaneously identify the best loan products for borrowers based on borrower scenario and eligibility rules.
Streamlined Operations
Beyond quoting price, a PPE can reduce risk and production expenses by automating your lock desk with rule-based functionality. Reducing lock desk involvement, automated processes expedite loan processing, which makes borrowers happy.
Rich Data for Real-time Insights
Competitive Data Solutions
When it comes to data, quality is everything.
Sophisticated capital markets platforms offer real-time data solutions, collected directly from the source, and they refresh it constantly. They use data from investors, a broad universe of users, and your loan pipeline to reveal critical insights into the primary mortgage markets, secondary mortgage markets, and your own business.
A capital markets platform equipped with quality data can serve as a strategic ally for mortgage lenders by providing:
Market Intelligence
Market intelligence helps lenders identify subtle trends and shifts in portfolio performance and can inform strategy based on volume, margin, pricing, and compensation factors.
Benchmarking Tools
Benchmarking tools reveal how lenders stack up against peers in terms of pricing and product offerings.
Business Intelligence
Business intelligence helps lenders provide better borrower service and operate more efficiently and profitably.
Pipeline Risk Management
Hedging and Trading Tools
Advanced hedging and trading platforms enable lenders to achieve unsurpassed pipeline risk management.
Important features of a sophisticated hedging and trading platform include:
PPE Integrations
A PPE integration ensures lenders receive best efforts pricing from all configured investors while simultaneously verifying product eligibility to avoid quoting unsalable sources. It also enables your hedging and trading platform to sync hedge position based on locks in the PPE and use proven strategies to transition to mandatory delivery.
Loan Sale Automation
Access to a large loan trading exchange opens the door to loan sale automation. Automating loan sales enables lenders to get live bids and complete trades within minutes instead of days by eliminating the need to individually email investors bid tape attachments. What’s more, a loan trading exchange can view the specific details of the loan trades they were involved in.
Advanced Analytics
Hedging and trading platforms can leverage real-time data to offer advanced analytics. These analytics use rich data visualizations to help lenders model risk position and production. They can flag loan-level issues that impact investor eligibility, in addition to offering on-demand executive reporting.
Optimize Your Advantage
Unlock Profitability With Optimal Blue
To fulfill the momentous role of helping borrowers achieve the American dream of homeownership, lenders need a proven partner that provides innovative technology, along with the network, data, and expertise to succeed in dynamic markets.
Optimal Blue delivers on these needs by effectively bridging the primary and secondary mortgage markets to form a comprehensive capital markets platform – giving you the power to optimize your advantage from pricing accuracy to margin protection, and every step in between.
Our network brings together thousands of individual lenders, investors, brokers, and vendors to give you unrivaled functionality and real-time data that fuel profitability.
Optimal Blue’s capital markets platform is used to:
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- price and lock 35% of mortgages completed nationwide
- facilitate $1.1 trillion in transactions annually
- support 38% of loans hedged and sold into the secondary market
- trade $375 billion of loans annually
- support 70% of MSR valuations done in the industry
Optimal Blue is the capital markets technology leader that empowers you to optimize your advantage to operate profitably in any market condition.
