Process Improvement Column: MCT Releases Custom TBA Indications To Provide Price Discovery For Illiquid Coupons
Mortgage Capital Trading Inc. (MCT) has released pricing indications for the to-be-announced mortgage-backed securities (TBAs) used by mortgage lenders to hedge their open mortgage pipelines. TBA indications improve transparency in illiquid market segments and act as a key reference point on lenders’ unique executions – critical data for generating accurate front-end borrower pricing.
“TBA indications can now be electronically requested ad hoc by mortgage lenders from multiple approved broker-dealers,” said Phil Rasori, COO at MCT. “For the first time, lenders have a custom reference point to their own TBA execution rather than working solely from market- wide pricing that may not be applicable to them.”
TBAs are the forward contracts on mortgage-backed securities used across the industry to hedge open mortgage pipelines against changes in interest rates during the origination process. With this latest development, MCT clients are able to make timely, on-demand pricing indication requests for specific coupons in the TBA market. This new price discovery is a significant benefit to mortgage lenders, since traditionally only the most liquid coupons are visible on standard market pricing reference tools.
“I needed pricing visibility on the GNMA 7.5% coupon, but there was no screen pricing available,” said Nick LaClair, Pricing Strategy and Analytics Manager, AVP at Embrace Home Loans. “Being able to electronically request and receive these indications enabled me to navigate the illiquid segments of the market and produce more accurate pricing, allowing us to offer more pricing options to our customers in a very challenging environment.”
Tony Garritano is the founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 20 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting PROGRESS in Lending Association was the next step for someone like Tony, who has dedicated his entire career to providing mortgage executives with the information that they need to make informed technology decisions to help their businesses succeed.
