First Bank Realizes Increased Profitability by Moving to Mandatory Loan Sales

We recently spoke with Andrew Stringer, Director of Secondary/Capital Markets at First Bank, who was hired to improve loan sale profitability by moving from best efforts to mandatory delivery.

Mr. Stringer considers additional pickup over best efforts his most important metric for evaluating success, but ended up finding an array of other improvements along the way through technology and automation. In this case study, Mr. Stringer explains how he leveraged MCTlive!^®, Bid Auction Manager (BAM^®), and Rapid Commit^® to improve loan sale pickup and operational efficiencies. Read the “At a Glance” section for quick details or the full interview further below.

MCT Technology Adds Value to First Bank

MCT is the industry leader in helping lenders move from best efforts to mandatory loan delivery, but groundbreaking technology is making an impact for lenders at every stage of growth. MCTlive!, Bid Auction Manager (BAM), and Rapid Commit have been especially helpful in saving time, generating better returns, and improving efficiency.

• MCTlive! – A powerful platform available for day-to-day loan pipeline management, trade positions management, and loan sale best execution. MCTlive! automates repetitive tasks and frees your time for other high-value functions.
• Bid Auction Manager (BAM) – MCT’s digital whole loan trading platform within MCTlive! that integrates with existing lender and investor processes to increase the speed and security of bid tape management while achieving true best execution.
• Rapid Commit – New integrations that automate Fannie Mae and Freddie Mac loan pricing and commitment with intelligent best execution capability. MCT was the first vendor to successfully complete a loan commitment with Freddie Mac’s new API.

Contact us to discover how MCT can increase profitability through mandatory loan delivery.

At a Glance: First Bank Benefits of Using MCT

Leveraging MCT’s technology has not only helped First Bank move from best-efforts to mandatory, but also helped them realize additional efficiency gains as well. With tools like MCT’s daily mark-to-market reporting, Mr. Stringer has added visibility into his pipeline. MCT has also helped First Bank become the first lender in the country to leverage the API for Fannie Mae’s Servicing Marketplace (SMP). 

In this section, we will quickly summarize the benefits that Andrew described as the most impactful to his business. Download Benefits of Bid Tape Management for Lenders (PDF) to learn each of BAM’s unique benefits for Lenders to improve efficiency and profits. 

Summary of Benefits & Supporting Data

Full Interview: First Bank Leverages MCT to Move to Mandatory

• Describe your Loan Sale Process with BAM.
• What was your Loan Sales Process before BAM?
• How much time have you saved doing loan sales since you started using BAM?
• How is BAM affecting your loan sale operations?
• Describe your experience using Rapid Commit functionality. How is it different than before when you were logging into the GSE systems?
• You are the first lender to leverage Fannie Mae’s API for their Servicing Marketplace Execution (through Rapid Commit). What can you tell me about this experience and execution? How much do you expect to use it moving forward?
• Describe you experience with MCTLive!
• How do you feel about the potential of recent and upcoming innovations in MCTlive? Is there anything particular you are excited about?
• What was the experience like working with MCT team?
• How is MCT going beyond the call of duty?
• Have you been introduced to any new contact through MCT?

Once all loans are in the system, I know where all my loans are going based on best execution functionality. I’ll then start the commitment process by including any negotiated elements then preparing everything in the commit tab. Before committing my loans, I determine which are going to agencies first. I like to start with the agencies such as the Fannie Mae Servicing Marketplace (SMP) options. I then hit Rapid Commit and it’s very streamlined because it intelligently completes product selection and delivers commitments for all loans with a  single click. Once this is complete, I’ll drop it out of the commitment section and move to bulk commitments. I have Bid Tape AOT with Wells Fargo, so I’ll move over to the AOT screen which helps me select the trades to assign. I then finish by hitting the assign button and send out the commitments for the remaining bulk investors.

Before the Tri-Party Automation, I had to write in all the fields, find and attach all the confirms, sign, and scan back to myself to put in. Without the Tri-Party automation, I probably wouldn’t bother because the time cost might outweigh the pick-up from the bid offer spread and the dealer savings. I usually do my best execution loan sales process once a week.

What was your loan sales process before BAM?

The biggest pickup I’ve experienced with BAM is the live environment. The platforms I was using before had stale information from earlier in the day. Trading activity throughout the day results in me having to put a finger in the wind on coverage.

The live environment also helps me build and optimize coverage throughout the day. From a loan sale perspective, if I had to do this with a previous hedge advisor I might have lost my mind. I’d have to spend time building and managing Excel spreadsheets. MCT’s platform allows me to accomplish my tasks with a small team.  I also like that MCT is aware of time sensitivity.

How much time have you saved doing loan sales since you started using BAM?

If I had to prepare, send, receive, and manage bid tapes by hand I would probably need to hire another person. Or at the very least I would be stuck babysitting spreadsheets instead of working on more valuable projects.

Describe your experience using Rapid Commit functionality. How is it different than before when you were logging into the GSE systems?

With Fannie Mae, one of the benefits with bulk delivery was Rapid Commit. Before, I would have had to open up a separate screen and log in to Fannie Mae’s PE- Whole Loan application, enter a bunch of data points in manually, then go back and reconcile that information back into the system. Rapid Commit has saved me time and kept me from making potential mistakes. It also takes just seconds compared to before when it would take 20 minutes with 3 or 4 different commitments.

You are the first lender to leverage Fannie Mae’s API for their Servicing Marketplace Execution (through Rapid Commit). What can you tell me about this experience and execution? How much do you expect to use it moving forward?

We’re primarily using retained execution with Fannie. We wanted to work in a co-issue execution so that they could go another direction than having the bank service the loan. SMP gives me the co-issue execution with the avenue of still being able to assign which co-issue relationships you are willing to do business with. For others with multiple co-issue executions there may be a bidding component but that is not our strategy at this time.

We don’t have many executions on the servicing side. The main purpose is doing the bifurcation of the servicing rather than having the bank be the sole owner. First Bank maintains ownership of the reps and warrants. When issues arise down the road, they are able to deal directly with Fannie. Doing this execution with Rapid Commit it feels exactly the same, but on the Fannie Mae side the automation selects the co-issue and the dropdowns which was before a manual process.

Describe you experience with MCTlive!

At my last company I had to build the mark to market (MTM) externally myself. When I got to review how the MTM was done on the reporting section I was pleasantly surprised. I also realized I had been doing things the hard way for a long time. Pickup over best efforts is a very important metric for me and my performance with the bank, considering that was why I was hired.

Settlement tracking is also easy with one click, which used to be a laborious manual process. Managing my trades is also easier in MCTlive! If I have an issue it is really easy to correct the data in the MCTlive! Platform.

How do you feel about the potential of recent and upcoming innovations in MCTlive? Is there anything particular you are excited about?

I’m really excited about the Freddie Mac Rapid Commit. It’s the missing link as far as tying my agency executions together. Wells Fargo bid tape AOT has also been huge. We’re also excited about Amerihome being added on October 1^st.

What was the experience like working with MCT team?

Paul has been an awesome champion of MCT. His support has been integral in getting this off and running. I showed up at First Bank mid-November and with MCT’s help, was able to get the platform running by January 1^st. I also like that Paul is always available to me. He understands my side of the business because he has done it before.

How is MCT going beyond the call of duty? 

When we first rolled out the AOT executions, Paul jumped in to help remedy all the hurdles they were seeing when they started. Paul has come through every time a data point seems off. He’s good at the detective work that goes into checking data. Paul is also good at explaining what is coming down the pike and what others are finding success in. It was great seeing his excitement when we were able to be one of the first movers. We’d be happy to beta test any new features and process improvements in the future!