Tuesday, December 01, 2009

PriceMyLoan and MCT Introduce Pipeline Hedging Tool

This post has been updated. See below.

PriceMyLoan (PML), Costa Mesa, Calif., has struck a deal to provide San Diego-based Mortgage Capital Trading (MCT) real time loan pricing data from the company's automated underwriting and pricing engine for use in MCT's proprietary hedging model. MCT is a secondary marketing advisory services firm. The company is calling the development the Automated Loan Pipeline Hedging and Analysis (ALPHA) Interface. I like that.

According to the company, the new interface will make it easier for mortgage lenders to benefit from the higher profits gained from mandatory executions. Presumably, these are lenders who are already working with MCT, but I don't have that confirmed yet.

"Investors are providing a huge profit incentive for lenders to move to mandatory executions," said Phil Rasori, chief operations officer for MCT. "However, the perceived risk is that lenders could lose money if they're not properly hedged. Our real-time hedge process combined with the ALPHA Interface minimizes this risk and provides continuous coverage for our clients throughout the day."

When lenders lock a rate in PriceMyLoan's automated underwriting and loan pricing engine, the ALPHA Interface automatically updates MCT'S hedging model, providing a tangible reduction in risk by shortening the time period between rate locks and hedge positions.

The company said that the ALPHA Interface proactively delivers pipeline data directly into MCT's hedging model, eliminating several steps in the data acquisition process that results in faster reporting with fewer errors.

"Lenders are exposed to interest rate movements the longer they have locks without hedge positions," said Rasori. "Combining PriceMyLoan's accurate up-front pricing with the ALPHA Interface allows us to hedge more frequently and more accurately. Instead of relying on the lender to send us intermittent pipeline reports, we can now peer directly into their pipeline and optimize our hedge strategy without any added effort from us or the client."

Update: Linn Cook at PriceMyLoan confirms that this new tool is for use by specific customers.

He writes: "This interface is specific to PriceMyLoan clients that utilize MCT’s services."

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