their price. You should work with your investors to determine this.
But, are bulk bids here to stay? I think, over time,
the pricing models will improve and the investor
process will need to be streamlined. The large investors are not set up for bulk bidding, and it has been
a challenge for them to implement. But traditional
direct, AOT, and flow mandatory models are not
robust enough to handle the single loan pay ups for
specified pools in the capital markets. Over time, I
think the pricing models will improve to accommodate these pay ups in real time. This will automate
the process of pricing loans and be a good thing for
the investors’ processes. Not only that, the originator
will benefit from more transparency into their sale
execution. Right now, there is no transparency into
bulk execution prior to obtaining the bid. By having a
model that will calculate the price for each loan, the
originator can mark their position better and make
better decisions on pricing loans for their originators.
For smaller or niche investors, bulk bidding will probably be here to stay. They might like the nimbleness
of being able to change their bid each day, but, I think
this will be a smaller part of the market. To be ready
for this and any other changes in capital markets, I
believe you will need best execution models that will
accommodate all executions and investors to optimize loan sales.
The thing I have loved about the capital markets
is that it is always changing. As the mortgage market
becomes more competitive and costs continue to
rise, getting the best price possible on loan sales will
be key to your success. By moving quickly and having
the right analytical tools, you could be ready for the
changes and improve profitability for your organization.
Karin Good CFA, is the Senior Vice President of Secondary Operations for Optimal Blue. She can be reached at
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