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Optimize Your Advantage With Pipeline Risk Management

Blog By

Optimal Blue

The daily fluctuations of interest rates have a direct impact on a lender’s pipeline of loans, so lenders must constantly examine and adjust their strategies to remain profitable. 

While cloud-based hedging and trading solutions can provide access to deep datasets and built-in investor connections, you should choose your technology and advisory partners carefully. Doing so can turn market volatility from a threat into an opportunity to originate more effectively and safeguard expected returns against interest rate movements.

Here are three features you should consider essential in a hedging platform:
  1. Integration with your product, pricing and eligibility (PPE) solution 

    Fully integrating your hedging and trading platform with your PPE solution is the only way to truly optimize pipeline risk management and attain a true mark-to-market valuation on your pipeline. Via PPE integration, hedging platforms can provide lenders with the most current best efforts price of all configured PPE investors, simultaneously verifying product eligibility to avoid pricing based on unsalable sources and bringing more options to the mark-to-market or loan sale process. The generation of base pricing is also automated to feed seamlessly to the PPE from the hedging platform, allowing for the feedback loop of loan sales to quickly impact your front-end pricing. If the PPE is built on a foundation of real-time data and analytics, lenders can make proactive adjustments to hedging strategies, ensuring consistent profitability throughout the life cycle of each loan. If a loan's profitability changes, lenders should be equipped with the analytical firepower to understand why and respond accordingly.

  2. Comprehensive pipeline risk management functions

    Advanced hedging and trading platforms enable lenders to better achieve profitability expectations. This daily risk management process of loan valuation, risk metric review, and reporting on both a global portfolio basis and loan-level basis adds value to your internal controls, safety, and soundness testing. Regardless of market conditions, speed, efficiency, and accuracy are necessary to make smart and timely decisions. Streamlining processes and procedures that previously took hours every day saves time and strengthens your risk policies by letting technology do the heavy lifting – leaving you more time to spend on strategy. 

  3. A robust best execution marketplace 

    When every basis point counts, it’s essential to consider every potential outlet for loan sales. However, doing so requires a comprehensive loan sale tool that analyzes all available outlets so you can confidently achieve best execution. For maximum return, this marketplace should include access to bulk investors, GSE integration, MSR valuation capabilities, and more. 

Guaranteed Readiness and Accuracy

The depth of Optimal Blue’s hedging and trading solutions are evidenced by the $375 billion of loans traded annually and 38% of loans hedged and sold into the secondary market. This volume demonstrates the platform’s capacity to deliver results even in the face of high demand and complex market dynamics. Plus, with an extensive network of investors, Optimal Blue is typically first-to-market with changes to investor guidelines. This ensures lenders consistently trade under the most current and competitive terms, keeping them one step ahead in a fiercely competitive marketplace.

In addition to managing individual transactions, Optimal Blue supports 70% of mortgage servicing rights (MSR) valuations in the industry, providing lenders with a comprehensive view of their portfolio's value over time. This level of insight is vital for lenders looking to optimize their servicing strategies and maintain a strong balance sheet.


Learn more about how solutions from Optimal Blue’s capital markets platform can improve risk management and optimize your advantage today.


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