Case Study: Mountain West Financial Increases Efficiency & Improves Margins with Trade Auction Manager (TAM)

We recently had a chance to sit down with Stacy Mohr, EVP of Capital Markets at Mountain West Financial, who has successfully implemented MCT’s Trade Auction Manager (TAM).

Mrs. Mohr now uses TAM to improve the efficiency, accuracy and profitability of her to-be-announced mortgage backed security trades.

In this case study, Mrs. Mohr describes how the combination of MCTlive!, TAM, Bid Auction Manager (BAM), bid tape AOT and MCT’s Data Write Back Service has now enabled her team to realize additional time savings and efficiency gains, which are unparalleled among hedge advisory firms. 

About Stacy Mohr

EVP of Capital Markets at Mountain West Financial

Mrs. Mohr is an experienced Executive Vice President of Capital Markets with a demonstrated history of working in the real estate industry. She has strong finance, hedging, loan sales, management and accounting skills. 

Featured Quote – “I was very worried that once I started trading on TAM that I would have no relationship with the broker/dealer. That absolutely has not been the case. In fact, because I don’t call them on a regular basis, my broker/dealers reach out to me and we actually have conversations and it’s not hectic trading time. We can actually talk about business more. I feel like the relationships have gotten stronger.

Mountain West Financial Improves Profitability & Efficiency with MCT

Mortgage originators are using MCT to add efficiency and profitability to their loan sales. Mountain West Financial was able to leverage the power within MCTlive! to accelerate their loan sale process. Learn how Mountain West Financial was able to make improvements. 

Profitability Overview

Features within MCTlive!, such as bid tape assignment-of-trade, allow Mountain West Financial to assign the trade to the investor and deliver the loans against the trade. This is saving Mountain West Financial up to 6 basis points on their loan sales. 

Efficiency Overview

Mountain West Financial is able to prepare bids for sale in BAM, optimize coverage in TAM, then easily commit the loans within MCTlive! The loan sale information is then automatically written into their LOS, saving an average of 8 hours per week.

Mountain West Financial is able to leverage the automation within Trade Auction Manager, Bid Auction Manager, and MCTlive! to create a more streamlined loan sale process. These tools improve the profitability of their loan sales. 

Summary of Benefits & Supporting Data

Mountain West Financial recently implemented MCT’s Trade Auction Manager with impactful results. The sophistication of TAM streamlines TBA trading and allows users to ensure optimal coverage in a fraction of the time. 

Automation tools such as MCT’s Data Write Back Service is freeing up Mountain West Financial’s bandwidth while reducing input errors. Removing manual data entry enables additional weekly loan sales, frees up warehouse lines, and saves extra basis points in the process. 

 

Data Entry

“All of the loan sale data is written back to the LOS and a human does not have to do it, saving 8 hours a week with no data errors.”

hours saved per week

Profitability

“Bid Tape AOT is saving us 3-6 basis points per loan sale.”

basis point increase

Warehouse Lines

“The time savings of BAM, TAM, and bid tape AOT means I can do 4 – 5 weekly loan sales versus 2 – 3. This frees up warehouse lines faster.”

%

more loan sales

Efficiency 

“Setting up a loan sale in the past took on average about 3 hours. Now it’s under an hour for a typical loan sale of $10 – $20 million.”

times faster loan sales

Describe your process of doing pipeline coverage and TBA trading using trade auction manager? How does it compare to your previous process?

Once we’ve decided which trades we want to take, we’ll open up Trade Auction Manager. One of the nice things is when you open up the parameters of your trade, it will automatically open up the auction feature if it’s eligible, meets the minimum volume, and we have the right broker/dealers. That happens automatically, and I don’t have to think about it. If it’s not eligible it continues with a TAM trade. I just have to choose which broker/dealer to send it to.

Before TAM, I would decide which broker/dealer I’m going to take a trade with, then pick up the phone, and then make the call with the trade written down. Once I got the price from the broker/dealer, I’d write it down next to the price I’d seen on the screen to make sure we’re in range. Then I’d execute and input the trade in MCT’s trade blotter. Not picking up the phone has its pros and cons, but I think one of the biggest benefits is that it takes out the human error.

Was the occasional error just part of life before TAM?

For phone calls, that verbal piece was so outdated and so prone to error. Even when you were talking on the phone they might say 102 and 3 and I’d come back and say you meant 103 and 3, right? You have to reconfirm with them to make sure they didn’t speak something wrong.

For the most part it’s just a frustration and a waste of time. But we have experienced in the past where we had a discrepancy when the trade confirmation came in. We called the broker/dealer and they disputed with us what the price actually was. There was no recording of the phone call so it was one person’s word against another. Since then, we began recording all of our calls on the trader’s lines. That’s an expense we don’t need to incur if we’re using TAM.

“Since then we began recording all of our calls on the trader’s lines. That’s an expense we don’t need to incur if we’re using TAM.”

Stacy Mohr

Mountain West Financial

I still reconcile every trade with TAM to make sure the broker/dealer recorded the same thing that we recorded. But we haven’t found any errors since we started using TAM.

 

How has TAM affected your experience with broker dealers?

 

A couple of the broker dealers we were already using were already on TAM. There was one that we were in talks with and it was exciting when they said they were on TAM. It brought another thing to the table. I’ve been talking to broker/dealers at the Western Secondary and I have been asking if they’re using TAM. It helps in the decision-making process.

 

Are you taking advantage of the new bid tape AOT executions through BAM and TAM?

 

Yes, we’re doing both of those. The bid tape AOT is a little harder for us to execute at the lower volumes that we’ve been at, but I anticipate that going up as our volumes go up. And we’re definitely seeing a pick up there of about 3-6 basis points. It’s a very easy execution and I don’t have any complaints about how it works.

I think that people had gotten away from the AOT just because it was so burdensome on the paperwork and all those extra steps. It doesn’t feel like any extra steps anymore, it feels like its just as easy as doing a bulk execution.

“We’re definitely seeing a pick up there of about 3-6 basis points. It’s a very easy execution and I don’t have any complaints about how it works.”

Stacy Mohr

Mountain West Financial

Has your loan sale process changed since implementing BAM?

One of the things that we felt when we went to BAM (Bid Auction Manager) is we’re much more comfortable doing loan sales more often. The process of it used to take up so much time that we spaced them out more and did them less frequently. With BAM we can sell everyday if we want to and its not a burden on my traders. Setting up a loan sale in the past took on average about 3 hours. Now it’s under an hour for a typical loan sale of $10 – $20 million.

Has your best execution process changed for sending and receiving bids?

We’ve seen much more consistency. MCT has been helpful in getting the outliers to get closer to the norm. Chase is a perfect example. Everyone’s on the same platform and everyone’s got the same expectations, so the pressure is put on outliers. We’ve seen a lot more consolidation in the time it takes to get our bids back and we’ve been able to shorten our time. It used to take us 2 hours to send a bid out and get it back. Now we can do it in 30 minutes. So a two hour window to collect bids is down to 30 minutes.

RELATED ARTICLES – Recent Innovations by MCT

MCT has recently published new content focused on improving profitability for mortgage lenders. View the content below for helpful information on controlling costs and driving growth.

How much time does it take to review the investor bids and select the outlets for sale?

Instead of inputting all the bids into an excel spreadsheet and comparing the results manually, we’re able to see them all on one screen side-by-side without any manual work from us. That probably saves us 30 minutes per bid. In all, we probably save several hours per loan sale. We can get it done first thing in the morning, then be done with it for the day. Where as before, it would absolutely take the first half of your day if not more. We used to do loan sales twice a week. Now we’ll do 4 – 5 times a week. It’s especially helpful when your warehouse lines start getting full with higher volumes. It gives us the ability to sell the loans on a flow basis instead of bulking them, which helps free up and turn your warehouse lines faster.

Have you seen any data accuracy or time savings from manual entry with BAM and the Data Write Back Service?

Yes, one of our favorite things is that BAM has been integrated with our LOS. In fact, all of the loan sale data is written back to the LOS and a human does not have to do it. No one likes doing that job and you would get errors. It used to be the first half of the day was the loan sale and the second half of the day was inputting the data into the LOS, which was literally going into each loan and inputting the information. And sometimes it would carry over into the next morning if you couldn’t finish it that day.

Has BAM affected the number of investors you’re able to send regular bids to?

We were pretty good with making sure everyone saw everything most of the time, but one piece that has been easier is the shadow bids. Setting up a shadow bid in BAM is literally telling your trader you want an investor setup with shadow bidding in BAM. Before we’d send our bid tape over, make sure it matches their tape, then someone over there would make sure all the data is mapped properly. It would take you a day or two before you could actually send a shadow bid in the past. Now it can be turned on in a couple minutes.  

Learn More About The Tools Available Within MCTlive!

MCTlive! is the most powerful platform available for day-to-day loan pipeline management, trade positions management, and loan sale best execution. MCT’s Bid Auction Manager (BAM) and Trade Auction Manager (TAM) within MCTlive! allow users to easily send bid tapes and adjust coverage. 

 

  • 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.
  • Trade Auction Manager (TAM) – TAM digitizes the historically phone-based process of bidding and exchanging TBA mortgage backed securities used by lenders to hedge their open mortgage pipelines. 
  • 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. 

How is it working with MCT and the staff?

The team at MCT has been very responsive. I always know that I can get ahold of someone. And its nice that I have multiple contacts, so it’s not just one person. If we have something that’s urgent, they drop what they’re doing and take care of that issue. If it’s something more long term they’re open to hearing my ideas and putting it on the road map or talking with other clients to see if it’s something that other people want. We’ve had a lot of positive interactions in terms of throwing some ideas out there and either finding out they’re already working on it, or they’ll do a little bit more research to see if it can be done.

Has MCT been helpful in keeping you informed about the market environment?

We have a weekly call with our trader Ron, even though we do our own trading. He always comes back from his staff meeting and shares all the latest news he’s heard, what’s coming with MCT or what other people have seen in the market. There have definitely been some developments that we didn’t hear anywhere else but from MCT. For example, when the markets move and the rates start changing coupons, he creates a plan for changes that are going to happen in our pipeline so we know what to expect.

Do you feel like MCT is understanding of your business goals and helps you reach those milestones?

Definitely with our open communication, we’re always talking about what we learned from looking back and what we want to do looking forward. Some of the goals are short term, some are definitely long term.

Any final comments?

There’s one thing I wanted to make sure to address when talking about BAM and especially with TAM. When they were first announced I was a little worried that this leans towards the commoditization and taking the relationship out of things. I was very worried that once I started trading on TAM that I would have no relationship with the broker/dealer anymore. That absolutely has not been the case.

And in fact, because I don’t call and talk to them on a regular basis, my broker/dealers reach out to me and we actually have conversations, and it’s not hectic trading time. We can actually talk about the business a little more. I feel like the relationships have gotten stronger. A lot of people may shy away from thinking it may hurt relationships, but I can tell you it’s actually improved ours.

“I was very worried that once I started trading on TAM that I would have no relationship with the broker/dealer anymore. That absolutely has not been the case.”

Stacy Mohr

Mountain West Financial

Mountain West Financial Improves Profitability with TAM

With the help of MCT, Mountain West Financial saves 8 hours a week in loan sale processes, earns an extra 6 basis points, and has increased their weekly loan sales by 50%. 

Mountain West Financial has leveraged the power of MCTlive!, BAM and TAM to remove manual data entry, free up warehouse lines, and improve the profitability of their loan sales. The sophistication of TAM has helped them streamline TBA trading, which ensures optimal coverage in a fraction of the time. 

The digitization of TBA trading has not only improved profitability and efficiencies for Mountain West Financial, but it has also helped improve relationships with their broker/dealers. The implementation of this technology will help ensure their success into the future. 

Schedule a demo or request more information about MCT’s services!

Contact Us