What is Mortgage Pipeline Hedging?
Residential mortgage banking is an important business line for many financial institutions. Managing the risks of the mortgage pipeline can often be the difference between good and great business results. Implemented successfully, mortgage pipeline hedge strategies protect the lender from the unpredictability of interest rates, thus reducing financial risk. Furthermore, successful strategies also can enhance profitability, sometimes significantly over time. As a trusted provider of financial services and capital markets solutions, the foundation of ALM First is building partnerships. ALM First helps clients enhance performance, maintain regulatory compliance, and improve their mortgage pipeline risk management process. Ensuring secondary marketing risk is properly managed is a step forward in an institution’s business strategy, allowing for greater focus on other value-add initiatives in mortgage banking.
Key Components of Mortgage Pipeline Hedging
- Fallout analysis and pull-through reporting
- Daily position reporting
- Pipeline exposure report
- Tracks lock, origination and loan sale activity
- Trading log
- Access to capital markets
- Execution of hedge trades
- Hedge cost analysis and best execution
- Performance reporting
- Ex-post assessment of profitability
- Accounting reporting
- Call report entries
- Accounting for pipeline activity
- Access to experts
- Policy architecture
- Assistance with regulatory compliance and auditors
- Strategy consulting
- Meet your secondary marketing needs
Benefits of Mortgage Pipeline Hedging
- Reduce risk and improve performance
- Simplify pipeline management and improve transparency
- Improve control over loan delivery timeline, allowing for lucrative warehousing strategies
- Gain access to capital markets experts
- Increase flexibility relative to forward committing with an Agency
- Improve fallout projections
- Meet regulatory requirements
- Better serve your customers through proper pipeline risk management
How does ALM First do it differently?
ALM First prides itself in its independent, holistic advice. As balance sheet consultants, our core philosophy revolves around assessing the greater need of a client’s balance sheet. As a trusted partner, we help our clients manage risk, enabling them to grow and scale. Through our partnership, ALM First provides:
- Access to Experts
- ALM First has extensive experience and expertise in fixed-income portfolio management. When it comes to hedging, capital markets, and strategy, ALM First is your trusted expert.
- Unbiased Strategic Consulting
- As a consulting firm, we focus on strategic positioning to improve institutional performance and profitability while ensuring the institution stays ahead of regulatory. At ALM First, we help your institution set an appropriate strategy given your unique needs and goals.
- As your partner, we provide as much assistance as you would prefer, from full-service hedge advisory to augmenting in-house efforts. Plus, our transparency will always keep you informed.