This user guide introduces the Note Rate Hedging functionality. It explains the use of each panel on the Note Rate Shock page and how to use these panels to model coverage and pair outs and see their effect on your note rate net position prior to executing the commitments.
Optimal Blue’s Note Rate Hedging feature is a pipeline risk management option available to Secondary Service’s users and is designed specifically for direct sellers to Fannie Mae and Freddie Mac. Note Rate Hedging allows direct sellers to measure and manage risk at the note rate level, eliminating the need to use securities prices as a proxy for agency commitment prices. A sophisticated user interface and tight integration with agency systems streamlines hedge management, reduces the potential for manual error, and drives better decision making.
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