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Optimal Blue Launches Support For Non-QM Loans

The latest release from Optimal Blue augments and expands their support for Non-QM and Expanded Guidelines products. Earlier this year, the company decided to make a substantial investment to further enhance support for these unique mortgage loan products after observing significant growth in this area. Currently, Optimal Blue’s Expanded Guidelines monthly lock volume exceeds $1 billion, a threshold 2.5 times the volume experienced just 18 months earlier.


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Significantly benefiting investor and lender clients alike, these powerful and innovative capabilities allow investor clients to further expand their suite of product offerings, improve accuracy, and gain new clients. Additionally, lenders can streamline inefficient workflows, enhance their competitive reach with new borrowers, and easily access the Non-QM and Expanded Guidelines product offerings for more than 60 leading investors. 


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“Sprout Mortgage congratulates Optimal Blue on the release of its new Non-QM product selection capabilities and thanks them for creating this industry leading technology,” said Mike Strauss, President of Sprout Mortgage. “While only requiring minimal user inputs and established data feeds from leading loan origination systems to automatically pre-populate additional values, Sprout has found Optimal Blue’s Non-QM filters to fully support its product line with complete accuracy.”


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Users of the Optimal Blue platform can quickly and easily identify the most accurate, “best fit” financing alternative for each and every consumer they serve. Immediately available to clients at no additional cost, a brand-new Expanded Guidelines section will be added to all applicable search, profile, and lock forms within the platform in order to fully support the unique specifications of Expanded Guidelines products. Close to 20 granular filters will be embedded into those forms for income verification, payment history, debt consolidation, bankruptcy, and more. In addition, Optimal Blue now evaluates specific housing events, financial outcomes, and other user-defined selections to further refine pricing precision and overall product searchability. 


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 “This is a tremendous step forward for the Non-QM marketplace and takes the uncertainty out of choosing the Non-QM loan that best fits borrowers’ needs,” Strauss continued. “As a result of the new Non-QM filters, loan officers can put away their makeshift scratch pad notes and instead, leverage the power of Optimal Blue’s engine to discover those eligible Non-QM products that provide borrowers with their lowest cost financing choices.”

“We are proud to offer enhanced Expanded Guidelines support to our clients,” explained Tiffany McGarry, Director of Client Services at Optimal Blue. “These market-leading capabilities further exemplify our continued focus on delivering unique secondary marketing solutions that help our clients differentiate and grow.”

Monetary Policy Impact On The Mortgage Market

U.S. monetary policy is the purview of the Federal Reserve (Fed) and is broadly responsible for the health and stability of the economy. The Federal Reserve Open Market Committee (FOMC) is the group that decides the monetary policy that the Fed will implement in order to fulfill their dual mandate of stable prices and full employment.


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The FOMC meets for eight regularly scheduled meetings per year. News of the FOMC’s policy decisions and their movement of the Federal Funds Rate have a significant impact on financial markets, including the mortgage market. It is therefore important to be mindful of the timing of FOMC meetings to remain protected against the potential impact of shifts in monetary policy and the resultant impact to mortgage profitability. 


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We have compared the OBMMI conforming 30-year fixed rate index against the FOMC meeting dates to measure the relative impact of monetary policy announcements. Our findings indicate that the absolute value of the percent changes the day after the announcement is 0.64%, while it is 0.41% for all other days.


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This shows that the announcement days are approximately 56% more volatile than all other days.  The impact of the FOMC’s commentary on monetary policy and, as a result, mortgage rates, is clear as some of the largest movements over the last two years cluster around the end of FOMC meetings.


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Digging a little deeper, when there is positive news for the mortgage market (rates decline), the rates on the conforming 30-year fixed mortgages move on average by -0.63% the following day, compared to an average positive day of -0.42%. Likewise, when there is negative news for the mortgage market (rates increase), the rates move on average by 0.54% the following day, compared to 0.41% on the average negative day.

Furthermore, Fed news often changes the local trend of rates with the turning/pivot points happening around the FOMC news events (03/15/2017, 12/13/2017, 03/21/2018, and 11/08/2018 are a few evident examples). 

Unfortunately, there’s no way to know which way the FOMC meetings are going to drive the market for any given meeting, but we do know that rate swings caused by monetary policy lead to a great deal of risk or exposure to a mortgage pipeline. This is clear as both the probability of a loan pull-through and the final loan price received on the secondary market can be significantly impacted. Consequently, a well-defined and managed mortgage pipeline hedge program is vital to the health, stability, and profitability of any enterprise with a mandatory delivery structure.

Optimal Blue: Rates Falling, Are Volumes Responding?

Optimal Blue recently released a suite of indices known as the Optimal Blue Mortgage Market Indices (OBMMI). These indices are calculated from actual locked rates with consumers across more than 30% of all mortgage transactions nationwide and are developed around the most popular mortgage loan products and specific borrower attributes.


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Rates have been falling steadily since mid-November 2018 and particularly sharply in March 2019. Specifically, the average 30-year conventional confirming 30-year rate fell from 5.16% in November 2018 to 4.55% in March 2019.  This drop was enough to spark a surge in mortgage consumer lock volume, with lock activity increasing by approximately 2.5% in Q1 2018 relative to Q1 2017. 


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Despite the drop in mortgage rates which is normally associated with signs of economic weakness, the economy has continued to show strong signs of growth, with unemployment at 3.8% in February and GDP growth at 2.6% in the fourth quarter of 2018. And signs of strength are also apparent in the housing market, with the monthly purchase only House Price Index showing a 0.57% increase in January. However, some market indicators suggest that an economic slowdown could be around the corner. In particular, the spread between 2-year and 10-year Treasury securities has narrowed since mid-2018 which is indicative of a weakening economy.  When the 10-year Treasury yield is near or less than the 2-year Treasury yield, it implies that markets expect the Federal Reserve to eventually reduce short term rates, a process which is generally associated with an economic slowdown. This expectation is supported by Federal Reserve Board statements indicating that they do not plan to raise rates the rest of the year and that they are slowing the runoff of the balance sheet. 


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The chart shows the Optimal Blue conforming 30-year fixed index plotted with the 2-10 yield spread, and indexed volumes of locked loans through the Optimal Blue product and pricing engine. Note that the yield spread has been low for a while, coinciding with the fall in rates. Unsurprisingly, the stark decline in rates has led to an uptick in mortgage activity.  

Citations:

Federal Reserve Bank of St. Louis, 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity [T10Y2Y], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/T10Y2Y, April 2, 2019.


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Optimal Blue, OBMMI, Conforming 30-Year Fixed Rate index, https://www2.optimalblue.com/obmmi/, April 2, 2019

Optimal Blue, internal locks volume information

U.S. Federal Housing Finance Agency, Purchase Only House Price Index for the United States [HPIPONM226S], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/HPIPONM226S, April 2, 2019.

U.S. Bureau of Economic Analysis, Real Gross Domestic Product [A191RL1Q225SBEA], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/A191RL1Q225SBEA, March 27, 2019.

U.S. Bureau of Labor Statistics, Civilian Unemployment Rate [UNRATE], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/UNRATE, April 2, 2019.

Partnership Enables Intuitive Mortgage Pricing Experience For LOs

Digital mortgage platform Maxwell has integrated with Optimal Blue’s secondary marketing platform. By leveraging Optimal Blue’s comprehensive product eligibility and pricing API, Maxwell’s open Connected Apps platform now enables an intuitive, design-led pricing experience for lending teams – significantly reducingcomplexity and accelerating time-to-close. 


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“Lenders on our platform tell us that transparent, accurate pricing is critical to achieve a satisfactory borrower experience,” explained Lindsay Hunt, head of product at Maxwell. “Optimal Blue shares Maxwell’s dedication to delivering a best-in-class experience, and we view this aligned partnership as an opportunity to reinvent the mortgage experience for borrowers and lenders alike.”


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With this advanced integration, lenders can evaluate product and pricing scenarios and share customized data with potential borrowers. Furthering Maxwell’s commitment to a relationship-driven mortgage experience, the loan officer is then equipped to deliver the true value and direction that borrowers desire as they pursue their optimal financing decision.


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“Together we are dedicated to creating an efficient, trustworthy and compliantloan experience that meets the diverse needs of today’s lending community,” said Bob Brandt, vice president of marketing and strategic alliances at Optimal Blue. “Data connections, like the one we’ve established with Maxwell, allow lenders to confidently – and accurately – source and disclose the various scenarios that today’s borrowers have come to expect.”


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As a member of HousingWire’sTECH100 for the second year and a recipient of Progress in Lending’s Innovation Award, Maxwell’s platform and API empowers mortgage lenders with a modern digital workspace that digitizes and automates key aspects of the homebuying experience, integrating with thousands of financial institutions and leading mortgage technology providers to streamline the lending process. Today, hundreds of lending institutions across the United States use Maxwell to close loans more than 45 percent faster than the national average.

“We always prioritize innovative features and partnerships that will make the mortgage experience more personal, more streamlined and more delightful,” said John Paasonen, Maxwell’s co-founder and CEO. “For us, it’s about empowering lenders to deliver an experience that will set them apart in the market. Our partnership with Optimal Blue falls right in line with that goal.”

Enabling “Lights-Out” Loan Pricing And Commitment Automation

Optimal Blue has launched the first in a series of robust APIs designed to create a “lights-out” integration with investors’ in-house systems and automate critical functions throughout the digital loan trading process. The first of its kind, this comprehensive API allows the investor to connect directly to the Resitrader marketplace and effortlessly automate pricing, offer pick-up, bid tape retrieval, bid placement and return, seller assignment, trade confirmation, and commitment.


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Designed specifically for innovative investors operating at scale with an existing trading technology platform in place, the “lights-out” APIs embed and trigger the market-leading capabilities of Resitrader without requiring the investor to ever leave their own in-house systems. 


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The investor is able to actively engage with Resitrader’s digital loan trading marketplace and hundreds of participating buyers and sellers, significantly increasing productivity without the prerequisite of training on a new platform. They can monitor deal flow in real time as the systems communicate directly on pricing and trading, and benefit from the speed, accuracy, and scalability provided. 


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Sellers benefit as well, in the form of speed of response, accuracy, and the ability to reallocate most of their time to making more informed execution decisions.


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“The Resitrader APIs are another step forward as we create an open architecture that links buyers and sellers across the Optimal Blue platform,” explained Scott Happ, CEO of Optimal Blue. “Our hedge advisory clients, as well as those that self-hedge or use another hedge provider, will benefit from this new technology as we continue to pursue our goal of serving all clients and vendors across the secondary market.”

New Mortgage Market Indices Debuts

Optimal Blue, operator of the mortgage industry’s leading secondary marketing automation platform, announced today the release of its latest market innovation – Optimal Blue Mortgage Market Indices or OBMMI. Created to provide consumers and mortgage professionals with greater visibility into key drivers of mortgage pricing, OBMMI provide an unprecedented level of daily insight into observed mortgage transactions. Based on actual locked rates with consumers across more than 30% of all mortgage transactions nationwide, OBMMI provide the most comprehensive, accurate, timely, and interactive analysis of pricing ever conducted in the mortgage industry.

Scott Happ, CEO of Optimal Blue said, “This is an important milestone in Optimal Blue’s transformation from a pricing engine to a digital mortgage marketplace. We are uniquely positioned to introduce these new benchmarks and trust they will be of value to a broad range of participants looking for transaction-based mortgage price data.”


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In this groundbreaking inaugural release of OBMMI, Optimal Blue provides multiple mortgage rate indices developed around the most popular mortgage loan products and specific borrower attributes. Each of the sixteen mortgage indices are represented with the national average of mortgage rates locked by consumers each day and include the change from the previous day. Indices can be compared through compelling interactive and configurable visualizations. For example, users can easily select pre-defined or custom time periods to isolate specific market movements or illustrate unique trends, such as the well documented jumbo-conventional spread inversion that currently exists.

“For close to two decades, Optimal Blue has led the mortgage industry with pricing automation technology designed to facilitate transactions between consumers and lenders,” explained Bob Brandt, VP of Marketing and Strategic Alliances at Optimal Blue.


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“Complete with the industry’s largest product and pricing library and backed by an unparalleled commitment to accuracy, Optimal Blue’s platform ensures that consumers are presented with the best-fit financing alternatives and that lenders consistently deliver the best price. OBMMI will help both audiences better understand trends and pricing in the mortgage market.”


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Optimal Blue, a financial technology company,operatesthe nation’s largest Digital Mortgage Marketplace, connecting a network of originators and investorsand facilitatinga broad set of secondary market interactions. The company’s technology solutions include producteligibility andpricing, lock desk automation, risk management,loan trading, and data andanalytics. More than $750 billion of transactions are processed each year across the Optimal Blueplatform, including approximately 30% of all consumer mortgage rate locks.


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Direct Integration Simplifies The Antiquated Complexities Of Updating Post-Trade Details

Resitrader, an Optimal Blue company and the leading online digital exchange for whole loan trading in the secondary mortgage market, integrated its fully automated trading platform with LendingQB. The streamlined interface enables participants to quickly and efficiently update loan-level trade information from the Resitrader platform into LendingQB immediately following completion of a trade. Resitrader creates a trade ticket for every trade between sellers and buyers, as well as Fannie Mae and Freddie Mac. LendingQB users can import price, commitment, and investor loan numbers across multiple trades with a single click.


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The integration includes data elements as specified by the originator, and the seamless integration also allows the user to generate and leverage custom fields applicable to their unique business processes and need. With one click, data is securely transported in real time and accepted by the LendingQB platform.


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“The ‘one-click’ feature is highly regarded by our clients,” said Linn Cook, Director of Sales and Marketing with LendingQB. “The ability to easily move data from trading to their LOS has saved an incredible amount of time and streamlined the archaic process of manual, duplicate entry.”


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The integration between LendingQB and Optimal Blue’s loan trading platform is considered an exciting first step of many new digital integrations between the firms and their respective platforms. With this initiative complete, the firms have now turned their attention toward fully integrating LendingQB with Optimal Blue’s hedge advisory and product eligibility and pricing engine.

“Our partnership with LendingQB further demonstrates our commitment to an open platform across the industry,” explained John Ardy, Vice President of Resitrader by Optimal Blue. “We look forward to expanding integrations with LOS and hedge-advisory firms to cover the full spectrum of the mortgage loan process; and we believe the relationship with LendingQB is one of many that will support the initiative for Optimal Blue and our network of strategic alliance partners to provide the highest level of satisfaction to our customers.”

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Automating Loan Acquisition For Correspondent Lenders

LoanLogics and Optimal Blue have formed a strategic partnership aimed at changing the digital correspondent experience. By delivering a real-time integration between LoanLogics’ LoanHD Correspondent Lending platform and Optimal Blue’s product eligibility and pricing platform, the companies significantly advance the automation of correspondent loan transactions and create a compelling competitive advantage for clients of both firms. In conjunction with this partnership, Optimal Blue has acquired LoanLogics’ product, pricing, and eligibility (PPE) technology business, LoanDecisions.

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LoanLogics’ LoanHD platform provides automation for every step in the loan acquisition process – from initial seller application review to loan funding and servicing onboarding – and overcomes the challenges that stem from a traditionally manual and fragmented correspondent loan purchase workflow. With the capabilities of LoanHD, investors ensure the loans they are buying are high quality, compliant, and accurately priced, while sellers experience rapid turnaround for funding and enhanced availability of warehouse lines. Additionally, both parties gain value by finding and curing defects before loans are purchased.

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Through real-time integration with Optimal Blue’s product eligibility and pricing platform, LoanLogics fully automates loan-level pricing and eligibility controls that are pervasive throughout loan file review and enhances a critical aspect of the correspondent workflow inside the LoanHD Correspondent Investor Module. The granular feature set of the Optimal Blue solution will drive greater configurability of the LoanHD platform, bringing new and unique capabilities to clients. Additionally, Optimal Blue will provide support for automated adjustments to loan- and bulk-level pricing based on automated due diligence results, while simultaneously delivering maximum flexibility in support of an investor’s secondary guidelines and pricing requirements.

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“Working closely with the Optimal Blue team, we will expand the value each company can offer our respective clients through an integrated solution,” explained Brian Fitzpatrick, LoanLogics CEO. “Individually, we are leaders in our respective disciplines. Together, we offer powerful technology to help investors ‘automate first’ across their loan purchase, pricing, hedging, trading, and counterparty risk oversight practices.”

“We are delighted with this transaction and extend a warm welcome to LoanDecisions’ customers and staff,” said Scott Happ, Optimal Blue CEO. “We are investing deeply in our PPE technology and are committed to delivering the best-in-class solutions and innovative partner connections across our marketplace.”

LoanLogics and Optimal Blue share a long-term vision for the relationship and consider this the first step of many together. With a collective focus on providing innovative automation for the mortgage industry and compelling value for joint customers, additional strategic initiatives and collaborative integrations across the companies’ respective technology platforms are already being considered.

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Enhanced Offering Provides Much-Needed Differentiator For Lenders

Mortgage Coach, creator of point-of-sale borrower conversion software, has partnered with Optimal Blue, a provider of secondary marketing automation. Through direct integration with Optimal Blue’s API platform, every Mortgage Coach application now seamlessly connects real-time, compliant product and pricing data with the compelling financial analyses Mortgage Coach is known for.

Through this collaborative effort and newly expanded product offering, Mortgage Coach and Optimal Blue enhance their long-standing strategic partnership and take their industry value proposition to a whole new level.

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“Without ever leaving the Mortgage Coach app on their mobile device, loan officers can create informative, side-by-side comparisons highlighting multiple loan programs and comprehensive pricing information in just seconds,” explained Bob Brandt, Vice President of Marketing & Strategic Alliances for Optimal Blue. “Combining the sophisticated product and pricing data at the heart of every mortgage transaction with a compelling user experience — and doing so whenever, wherever it matters most — is a game changer for the industry.”

The benefits are not exclusive to lenders and loan officers. Today’s consumers immerse themselves with the details behind major financial decisions and pride themselves on deeply understanding their alternatives. Mortgage financing is no exception. When provided with a comparative, in-depth analysis of the financial impact of their best financing alternatives in a highly consultative environment, consumers are more engaged with their loan officers and more likely to move forward with a loan.

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“In today’s price compression marketplace, converting every prospect into a borrower is the most important aspect of achieving increased profits for mortgage lenders,” said Joe Puthur, President of Mortgage Coach. “This new innovation gives lenders the instantaneous benefit of earning more commitments at a lower cost of acquisition.”

Mortgage Coach, the company’s flagship platform, is the technology behind the Total Cost Analysis (TCA), a report that illustrates the long and short-term impact of any loan program on the borrower’s financial situation. The TCA incorporates real time rates, fees, closing costs, and program information and presents its findings using simple yet powerful graphical elements like charts and graphs. The TCA provides a level of clarity that is virtually impossible to achieve without the Mortgage Coach platform.

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“The difference between using a TCA to explain mortgage options and using any other method is like the difference between having a film described to you versus watching it in high definition with Dolby sound,” explained Mike Hardwick, President of Churchill Mortgage. “Having been in partnership with Mortgage Coach and Optimal Blue for several years now, we’re happy to have helped thousands of borrowers make a better, more informed decision. These new capabilities will provide greater clarity, transparency, and confidence to any borrower – in a way that is faster for every loan professional.”

Ensuring A New Kind Of Compliance

Comergence, an Optimal Blue company and compliance solutions provider to the mortgage industry, has launched its newest compliance solution, Social Media Compliance. Powered by sophisticated regulatory intelligence capabilities and embedded with the specific policies and procedures of a licensed mortgage originator, the unique service addresses the growing need and seemingly insurmountable task of monitoring social and digital media communications within a regulatory framework.

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“Social media is a powerful tool used more and more by today’s loan officers to source business. Yet, with numerous regulations today and even more expected in the future, the risk is high for unintentional social media mistakes that could pose significant financial risks for lenders,” stated Scott Happ, Chief Executive Officer of Optimal Blue. “We recognize that adherence to growing compliance demands will be challenging for lenders if social media compliance remains a manual, time-consuming effort coming at a great cost. By delivering this robust automation at an extremely affordable price, lenders discover an immediate ROI – regardless of whether they have five loan officers or hundreds.”

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The Social Media Compliance system can evaluate social media activity across all loan officers and all venues in real time via automated scheduling. The platform also identifies potential violations, highlights usage trends, and provides 360-degree audit reports for a deeper violation review so lenders can communicate and remediate internally and externally – all within a single, turnkey compliance tool. The system provides enormous advantages for the hundreds of organizations that already rely upon other Comergence compliance solutions, including streamlined organizational and user set-up.

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“Social media presents a large playing field and a new frontier for today’s lenders that is not going away anytime soon. Leveraging automation removes the heavy lifting and positions lenders to properly take full advantage of the opportunities through this great marketing asset,” said Greg Schroeder, Vice President of Comergence. “Everything lenders need to self-manage social media compliance is available in our solution, bringing efficiencies, simplicities, and real-time oversight with little effort.”

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