Trusting Your Hedge System in Today’s Volatile Marketplace
With an increasingly competitive mortgage market and interest rate volatility, there’s nothing worse than not being able to trust—and verify—the data in your hedging solution.
Understanding your position and managing it confidently requires real-time insight into the details of every loan, at a granular level. It’s the only way to identify and reconcile issues in your locked pipeline as soon as possible. True confidence in your hedging position starts with being able to examine loan level details. It also requires the ability to provide deep insight into every loan as well as identify every change.
Having the right recon tools is essential
As interest rates continue to rise, margin squeeze becomes more apparent and ever-tightening profitability becomes the new reality. This means there’s much less margin for error, so pinpoint accuracy is mandatory when constructing your hedge position.
When a carefully considered estimate doesn’t look quite right the next day, it is helpful to be able to drill down into loan level details and quickly identify problems. Seeing the changes day over day—in near real-time—can save hours of trying to identify the root causes. And of course, there’s the snowball effect. One issue often leads to another and the problems keep getting bigger. If your position is wrong, your P&L is wrong and that will need to be reconciled too. All of this is happening in a marketplace that doesn’t “press pause” while you try to get to the bottom of it.
When choosing a hedging solution, it’s important to evaluate the Position and Gain/Loss reconciliation tools that are built-in. Not all systems provide the loan level detail required to accurately and efficiently reconcile your position. And when you can’t dig deep enough, can you really be confident that you understand the problem?
Powerful reporting, scheduled and on demand
Hedge reconciliation tools enable users to view specific reasons for day-over-day changes to your Position or Gain/Loss, and then drill down into the loan level detail. To supplement the platform tools, detailed and dynamic reports should be accessible in near real time. In today’s highly competitive mortgage market an increasing number of users are looking for the ability to have reports processed overnight so they are in their inbox the next morning.
Industry leaders are looking for intuitive systems that track and categorize changes so traders don’t have to sift through massive amounts of data. They want to be able to easily drill down to specific data sets and run any report on demand.
Manage your position more accurately every day
The right hedge system for your organization is going to be the one capable of providing the information you need at the speed you need it. While today’s volatile market conditions pose significant challenges, having the right hedge solution can help protect profits.
CompassPoint℠ re-defines what secondary professionals can accomplish in a day, week and month. Serving lenders of all sizes, ranging from small independent mortgage companies to large government agencies, contact us at firstname.lastname@example.org to learn how CompassPoint can meet your organization’s needs.