MCT Whitepaper:
Hedging 101

Learn from our secondary marketing experts how you can use hedging as a tactic to mitigate risk when selling mortgage loans.

This whitepaper will review information on moving to mandatory, the strategy of hedging, and how to identify if it is the best option for an originator to use when selling on the secondary market.

Fill out the form to download Hedging 101. 

Download Whitepaper

  • This field is for validation purposes and should be left unchanged.

Using hedging as a tactic to mitigate risk when selling a mortgage loan can seem like a daunting process to undertake. There can be risks associated with utilizing hedging, but if done correctly, hedging can help diversify profitability strategies and produce a greater return over time.

About the Whitepaper:

MCT’s Hedging 101 whitepaper seeks to explain how hedging can be used as a vehicle to mitigate risk in the secondary market.

Topics include:

  1. What is Hedging and Why is it a Valuable Strategy?
  2. Benefits of Hedging
  3. Making the Decision to Pursue a Hedging Strategy
  4. Hedging Advice

Download our whitepaper today to learn more about mortgage pipeline hedging!

Featured Whitepaper Excerpts:

In the business of buying and selling assets, hedging can be used as a vehicle to mitigate risk. In the secondary mortgage market, hedging loan sales can produce the greatest return in rising rate environments, yet historically, it has been frowned upon by some lenders and viewed as too risky to implement. Download this whitepaper and learn about this valuable strategy for maximizing profitability in the secondary market.


Hedging is a tactic used during mandatory loan sales in the secondary mortgage market to ensure the originator of the loan is securing a payout after a loan is sold to an investor. In a way, one can think of hedging as a form of insurance – if the rate is less than ideal during the sale, they have the hedge to fall back on.


If the originator has many loans that fail to close, it might be wise to risk any additional fall-out fees when moving to mandatory. However, if they have a solid loan volume and not many fail to close, it might be time to move to mandatory to risk reaping the benefits of higher payouts. Historically speaking, the data will always point the originator in the right direction.


When done correctly, an originator can earn more on their loan sales through improvements in the accuracy of their pull-through rate, monitoring the pipeline, and optimizing their investor set. Investor set, product mix, and data integrity are all vital features to consider optimizing to see the benefits of hedging. It is important to remember that a best practice is to update pricing with data changes or lock extensions and a mark-to-market report shows pipeline changes day over day. This data integrity is vitally important to making successful hedge decisions.