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New Whole Loan Committing Grids Enhance Certainty of Execution

By Jeff Bounds | February 02, 2016

New Whole Loan Committing Grids Enhance Certainty of ExecutionCustomers seeking to sell whole loans to Fannie Mae will receive increased transparency into the market, thanks to Fannie Mae’s new expanded whole loan committing grids that rolled out yesterday.

By adding 10 new whole loan committing grids to the Pricing & Execution-Whole Loan™ (PE-WL) platform, Fannie Mae is providing a new level of clarity on 15- and 30-year commitments with amounts of $175,000 or less – clarity once available only on mortgage-backed securities (MBS) execution.

The changes will also give enhanced certainty of execution, something else that Fannie Mae’s customers have requested.

“Customers have been asking for more transparency in the pricing that they receive from Fannie Mae – these grids provide that,” says Mickey Maloney, a vice president in Fannie Mae’s Capital Markets.

“The expansion of our whole loan committing grids is part of Fannie Mae’s ongoing commitment for delivering the best value,” Maloney says.

Actual Prices on Display

The expanded grids cover 15- and 30-year fixed-rate mortgages with maximum original loan amounts of $85,000, $110,000, $125,000, $150,000 and $175,000.

“All lenders will benefit from the new pricing; these grids mirror the MBS markets, where pay-ups are most prevalent in the lower loan balance space,” Maloney says. “These new grids show the price Fannie Mae is willing to pay for each of these stories.”

Currently, customers can take forward whole loan commitments using the new grids up to 60 days out, and thus lock in the value of these loan types, he adds.

Additionally, the expanded committing grids behave like typical whole loan commitments, giving lenders the ability to extend, pair-off and over deliver. Therefore, customers are afforded the same simplicity and certainty they are accustomed to with all PE-WL commitments.

The new committing grids mean Fannie Mae customers will receive clarity both on pricing for certain loan characteristics and on how the secondary market is responding to given mortgage types at a particular time.

“The reason we’re doing this is that when our customers sell loans to us, they want simplicity, certainty and transparency,” says Douglas White, a vice president in Capital Markets at Fannie Mae. “The enhanced grids provide detailed insights into the market-driven prices that their loans receive.”

Listening to Customers

Fannie Mae uses outlets like its Capital Markets Pricing and Sales Desk to regularly solicit customer input on how it can do business better, White says.

“We frequently do calls with customers on the challenges they’re facing and take their feedback. That was how this project began.”

While the needs that customers were expressing were relatively straightforward, it soon became obvious that the work that Fannie Mae would have to do to accommodate them might not always be that simple.

“It meant a change to our infrastructure, and that was challenging,” White says. “We built a more dynamic platform, which we rolled out last year.” Among other things, that platform provided customers with new functionality that was easier to use.

After that, Fannie Mae began drilling down to get more specifics from its lenders about how it could add additional value to the PE-WL platform.

“For this specific enhancement, we spent months talking to our customers, ensuring we were hearing them correctly so we could incorporate their feedback into our build efforts,” he says.

With the ability to be more dynamic, Fannie Mae completed work within weeks on the expanded grids and had them ready to roll out.

In the larger scheme of things, White notes, Fannie Mae was simply responding to market forces.

“Technology is getting better,” he says. “We had to improve as well. This is a concrete example of how we strive to provide what customers ask for.”

Jeff Bounds is a freelance writer based in Dallas. He has been writing about financial topics since the early 1990s.