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Secondary Marketing

Hedge Model Review:

The Hedge Model Review procedure reviews the model reports to determine if the results are reasonable given market conditions and consistent with typical mortgage banking hedge strategy. This method provides a general observation of the hedge model results.



Hedge Model Validation:

In the Hedge Model Validation method, month-end pipeline and warehouse data are obtained and run through an independent, previously verified hedge model to calculate a new hedge position assessment. The independent results are then compared with the existing hedge position to determine validation.


This Validation complies with the requirement of the OCC 2011-12, FRB SR 11-7,  Model Risk Management bulletin (previously Bulletin OCC 2000-16 Risk Model Validation).

  • Best Efforts to Hedging Launch

  • Pre-Hedge Assessment

  • Hedge Model Validation - VIDEO

  • Hedge Pull-Thru Confirmation

  • Hedge Advisor Selection

  • Pricing Strategy & Lock Desk Implementation

 - CEOs are frustrated not knowing if their trades are executed well 

 - Secondary managers are frustrated by CEOs questioning their trades

 - MBS can bridge the communication gap 



 Secondary Marketing Services include:


  • Pre-Hedge Assessment Evaluates:
    - Secondary Policy and Procedures
    - LOS Data Reliability & Status Code Structure

    - Hedging Authorization & Pull-Thru Calculation Base
    - Dealer Margin-Call Triggers & Call Report Line Designation
    - Accounting & Technology Structure
    - Data Accuracy & Staff Preparedness for Hedging
    - Understanding Position Recommendation
      ~ MTM Reporting
      ~ IRLC Derivative 
      ~ Shock Analysis


  • Hedge Model Validation Includes:
    - Independent Assessment of the logical soundness of the Model
    - Comparison of Model to "benchmark" models
    - Validation of Model Predictions to "real-world" events
       See MBS webpage FDIC / OCC


  • Pricing Strategy – MBS can help you design a pricing strategy to maximize profit and remain competitive. 


  • Best Efforts to Hedging – MBS can help you make the transition from Best Efforts to mandatory forward commitments and TBA Open Short.

  • Secondary Marketing Policies and Procedures – MBS can create custom procedures tailored to your way of doing business.

  • Staffing and Training Assistance – MBS can help you hire and train the necessary staff if you want to handle your secondary marketing efforts internally.

  • Systems Automation and Technology – MBS can help you automate your secondary marketing functions and recommend the necessary technology pieces to help in that effort.

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