Ellie Mae®, the leading cloud-based loan origination platform for the mortgage industry, announced today the expansion of the strategic partnership with Optimal Blue®, the leading secondary marketing automation platform in the mortgage industry. The expansion includes the collaboration on multiple next-generation, API-based integrations between the Ellie Mae Digital Lending Platform and the Optimal Blue’s Marketplace Platform™ – specifically the company’s flagship Product & Pricing, Hedge Analytics, and Loan Trading solutions. Additionally, Optimal Blue’s Hedge Analytics and Loan Trading solutions now join Optimal Blue’s Product & Pricing as recommended solutions in the Ellie Mae Marketplace™.

Focused on creating a seamless, end-to-end workflow between lenders and investors, Ellie Mae and Optimal Blue are underway with new initiatives to rethink how to best leverage Ellie Mae’s Digital Lending Platform and Optimal Blue’s industry-leading pricing, hedging, and loan trading capabilities to benefit both sellers and Investors. Their collective efforts will create new and further enhance existing integrations between Optimal Blue and Encompass Consumer Connect®, Encompass LO Connect®, Encompass TPO Connect®, and Encompass Investor Connect® solutions that will enable a completely automated data and document exchange between their lender and investor clients. The companies plan to collaborate on these new integrations and efficient workflow improvements throughout 2020.

“Ellie Mae is thrilled about the expansion of our partnership with Optimal Blue,” said Parvesh Sahi, senior vice president, business development for Ellie Mae. “Ellie Mae is committed to enabling further innovation on the Ellie Mae Digital Lending Platform with industry-leading partners like Optimal Blue. This investment to deepen our partnership enables both originators and the purchasers of mortgage loans originated on Encompass to benefit from Optimal Blue’s broad secondary marketing capabilities.”

“Optimal Blue is proud of the work we have done over the past several years to strengthen our Ellie Mae partnership,” explained Scott Happ, President & Chief Executive Officer of Optimal Blue. “Increasing the joint value proposition to our mutual clients by building deeper and more meaningful pricing, hedging, and trading integrations between our platforms to create more efficient workflows is very exciting news for Optimal Blue, Ellie Mae, and our clients.”

ABOUT ELLIE MAE
Ellie Mae is the leading cloud-based loan origination platform provider for the mortgage industry. Ellie Mae’s technology solutions enable lenders to originate more loans, reduce origination costs, and shorten the time to close, all while ensuring the highest levels of compliance, quality and efficiency. EllieMae.com or call 877.355.4362 to learn more.

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PRESS CONTACT FOR OPTIMAL BLUE
Robert J. Brandt
Vice President, Marketing & Strategic Alliances
(469) 609-5585
bbrandt@optimalblue.com

PRESS CONTACT FOR ELLIE MAE
Erica Bigley
Ellie Mae, Inc.
(925) 227-5913
Erica.Bigley@elliemae.com

Caitlin Coffee
Allison+Partners
(312) 635-8204
EllieMae@allisonpr.com

© 2020 Ellie Mae, Inc. Ellie Mae®, Encompass®, AllRegs®, Mavent®, Velocify®, the Ellie Mae logo and other trademarks or service marks of Ellie Mae, Inc. appearing herein are the property of Ellie Mae, Inc. or its subsidiaries. All rights reserved. Other company and product names may be trademarks or copyrights of their respective owners.

— The company’s suite of products provide a transparent process for buyers and sellers —

The last 18 months have seen a significant shift in both the primary and secondary mortgage markets. Facing shrinking loan volume and compressed margins, lenders have broadened their loan products for borrowers who fall outside of traditional government or conforming guidelines, prompting investors to add programs that incorporate these loans.

But these new opportunities present real challenges. The number of investors has grown significantly since the financial crisis, with 150 organizations now actively buying loans. And the types of loans available for purchase have also multiplied. Combined, these factors have compounded the complexity of the secondary marketing function, demanding sophisticated automation for accurate content management and execution.

Fortunately, Optimal Blue has spent the last several years relentlessly auto-mating the entire secondary marketing process — from content to commitment, and everything in between — and can meet these challenges head-on.

Optimal Blue, founded in 2002, provides not only industry-leading solutions for originators and investors but also an enterprise-level, end-to-end platform that processes more than $750 billion worth of transactions each year. Its Digital Mortgage Marketplace connects mortgage buyers and sellers in an efficient, transparent process that facilitates a broad set of secondary market interactions.

The company’s view into the data associated with these transactions led it to develop the Optimal Blue Mortgage Market Indices (OBMMI) to provide consumers and mortgage professionals with greater visibility into key drivers of mortgage pricing. Based on actual locked rates with consumers across more than 30% of all mortgage transactions nationwide, OBMMI provide the most extensive and accurate interactive analysis of pricing ever conducted in the mortgage industry.

OBMMI aggregates data from 2 million transactions a year between 800 lenders, 3,000 brokers, and 200 buyers of loans and synthesizes that data into 16 primary and detailed mortgage rate indices. Updated daily through a robust API, the indices can be compared with each other to isolate specific market movements and spot trends.

“For close to two decades, Optimal Blue has led the mortgage industry with pricing automation technology designed to facilitate transactions between consumers and lenders,” explained Bob Brandt, vice president of marketing and alliances at Optimal Blue. “Complete with the industry’s largest product eligibility and pricing library, and backed by an unparalleled commitment to accuracy, Optimal Blue’s platform ensures that consumers are presented with the best-fit financing alternatives and that lenders consistently deliver the best price.”

Optimal Blue continues to evolve its platform, providing lenders and investors with inspired technology that automates key functions of the secondary marketing process.

AUTOMATING THE SECONDARY MARKETING FUNCTION

Product Eligibility & Pricing

Optimal Blue is the largest product eligibility and pricing (PPE) provider in the industry, serving more than 50% of the market and processing $600 billion worth of rate locks every year. The company has made significant investments to automate this functionality and the result is a robust system that delivers a single source of compliant pricing with 99.995% accuracy, making Optimal Blue’s PPE the system of record for the mortgage industry.

That accuracy is a hallmark of Optimal Blue, which uses an extensive set of product filters to identify applicable loan programs and then evaluates best execution pricing among eligible products. This capability is even more critical given the growing number of non-QM loan products in the market.

In addition to the execution, content, and margin management that Optimal Blue’s flagship PPE is known for, the company recently rolled out a new innovation — a “lights-out” lock desk functionality that can automatically lock the loan, change the lock, change the product type, grant exceptions, and more.

“When it comes to secondary marketing, the lock desk is a high-cost function,” said Optimal Blue CEO, Scott Happ. “We’ve automated the entire process. Lenders can configure auto-accept policies for locking and relocking products with characteristics that don’t require a manual touch, thereby reducing lock desk involvement in scenarios where automated policies can do the work instead.”

Hedging

Optimal Blue’s sophisticated hedge advisory and analytics platform integrates seamlessly with its PPE and digital loan trading platforms. This automated collaboration provides Optimal Blue clients with a tremendous competitive advantage.

First, interest rate locks from the PPE flow into the pipeline in real time, ensuring that the hedge position is always fully updated. Second, the broadest possible set of executions is available, ensuring that lenders will always discover the best price.

In addition, automating the loan trading and committing process through the Resitrader system reduces costs and error rates. “By combining exceptional analytics with unmatched system integration, Optimal Blue is uniquely positioned to help lenders succeed when deploying a mandatory execution strategy,” Happ said.

Loan Trading

In July 2018, Optimal Blue acquired Resitrader, creating the mortgage industry’s largest mortgage loan trading platform. Resitrader’s interactive trading environment enables buyers, sellers, and their advisors to transact in real time using an auction process and replaces the widely-used method of exchanging bid tapes via email.

The solution also helps traders optimize executions by supporting shadow-bidding, the posting of axes, chat-based communication, and color reports. Resitrader has achieved remarkable success with its trading platform over the past year, recording a 400% increase in transactions.

Optimal Blue has made it easy for investors to use Resitrader through the recent launch of another robust API designed to integrate with investors’ existing, internal systems. The APIs embed and trigger the market-leading capabilities of Resitrader into whatever trading application the investor is currently using, similar to the API plug-in capability offered through Optimal Blue’s PPE.

“Most clients are perfectly fine with coming into the Resitrader system to do their business,” explained Happ. “However, the largest investors look to our highly functional and real-time APIs to integrate with their own infrastructure and technology, so they are still able to take advantage of the benefits of the Resitrader platform. This is just another step for us to integrate into investor and origination businesses to maximize the efficiencies they require.”

Social Media Platform

Social media is an extremely powerful business development tool for lenders and Optimal Blue provides the only fully automated social media compliance platform designed specifically for the mortgage industry. The comprehensive platform enables lenders to manage the social media activities of loan officers through audits, monitoring, and collaboration. The audits are point-in-time, comprehensive reviews, while automated monitoring constantly evaluates social activity and proactively identifies trigger terms and keywords to isolate compliance concerns requiring remediation.

This piece was originally featured on HousingWire.com.

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PRESS CONTACT FOR OPTIMAL BLUE
Robert J. Brandt
Vice President, Marketing & Strategic Alliances
(469) 609-5585
bbrandt@optimalblue.com

— Resitrader by Optimal Blue connects lenders and investors in real time to accelerate results —

For the last several years, the mortgage industry has experienced a disruptive wave of technology innovation by vendors aiming to improve results and lower costs. Until recently, the vast majority of these innovations have focused on automating the front-end of the digital mortgage loan process, leaving significant opportunities to automate post-closing processes such as whole loan pricing and loan trading. Now, Optimal Blue has upended the status quo in the mortgage industry by building a revolutionary digital marketplace that is transforming the way loans are bought and sold in the secondary market.

Optimal Blue’s recent acquisition of market leader Resitrader created the largest loan trading platform in the industry. In the last year, Resitrader saw a 350% increase in the number of sellers and more than 300% growth in loan trading volume, while also increasing the offer-to-purchase rate for sellers on the platform.

“Given Optimal Blue’s unique and strong market share position, the acquisition put us in the front seat to create an industry-standard platform for whole loan pricing and trading,” explained John Ardy, vice president of Resitrader by Optimal Blue.

By connecting lenders and investors in real time, Resitrader automates what used to be a manual, email-based trading process and makes it incredibly scalable. Besides the immediate time savings, the Resitrader platform fosters real relationships between engaged buyers and sellers, which is mutually beneficial to both sides.

Benefits for sellers

On the sell side, Resitrader empowers the lender to optimize true best execution by offering loans to an entire marketplace of buyers instead of the four or five investors they are used to dealing with. Originators can connect with new investors almost instantly and accelerate the traditionally protracted, difficult shadow bidding process, so what used to take weeks is now accomplished in seconds by clicking on someone’s name to view their pricing.

Benefits for buyers

The transparency of pricing within the platform creates the opportunity for sellers to find investors quickly and provides investors with valuable insight into the competitiveness of their bids. Resitrader reports this information automatically, so investors can see why they won or lost certain bids and adjust their strategy accordingly.

“Resitrader takes a function that was manual from end to end and fully automates all of it,” continued Ardy. “It streamlines communication and eliminates the latency that occurs with the manual process. It’s very exciting — in an area that was never very exciting.”

Fannie Mae and Freddie Mac

Understanding their critical role as investors, Optimal Blue has paid special attention to streamlining connections with Fannie Mae and Freddie Mac. The company completed an early integration with Fannie Mae’s Pricing and Execution – Whole Loan application last year and was first to integrate with Freddie Mac’s Loan Selling Advisor in August. Because Optimal Blue operates in a SaaS environment, Resitrader clients had full access to the new capabilities on the same day.

The integration with Loan Selling Advisor allows the user to seamlessly acquire Freddie Mac pricing data and compare against alternative executions, such as bulk bids. It also enables the automated commitment of Freddie Mac loans by returning trade confirmations directly back to the Resitrader user, so they don’t have to use multiple systems to conduct a single transaction.

Optimal Blue then followed up with an enhanced integration that fully automates the cash pricing and commitment process to include cash pay-ups for fixed-rate mortgages across all specified loan attributes. Prior to this integration, sellers would have to download and print a .PDF from Freddie Mac and calculate these loan details.

Now, that data pull takes seconds.

New efficiencies

Once buyers and sellers see the ability to interact at such a fast rate, the platform quickly becomes indispensable to their business model.

Jim Glennon is the director of secondary services at Optimal Blue and he noted a major gain in efficiencies using Resitrader for Optimal Blue’s full-service hedge advisory clients. “As we add new layers of innovation to our core platform, we are giving lenders and investors incredible new opportunities to get things done faster and better. This is part of the mortgage process that no one spent much time on, and now it has caught up to the rest of the digital mortgage process,” Glennon said.

As significant as the evolution of the Resitrader platform is individually, the seamless integration of Optimal Blue’s solutions across the entire secondary market platform is the true game changer.

“When Resitrader operated independently, we were able to grow to $2 billion a month,” said Ardy. “Now, backed by the power of Optimal Blue’s Digital Mortgage Marketplace, our growth rate will accelerate and catapult Resitrader into the largest industry destination for digital loan trading and bring considerable value to platform participants.”

As adoption of these interactive loan trading platforms flourish, Optimal Blue aims to continue looking toward the future of the industry with an ongoing commitment to deliver market-leading mortgage automation.

This piece was originally featured on HousingWire.com.

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PRESS CONTACT FOR OPTIMAL BLUE
Robert J. Brandt
Vice President, Marketing & Strategic Alliances
(469) 609-5585
bbrandt@optimalblue.com

— Optimal Blue’s intelligent trade blotter enables easy modeling and trade execution; draws high praise from clients —

The comprehensive pipeline risk management and hedging capabilities of Optimal Blue’s Enterprise Secondary Marketing Solution just got better. Today the company has unveiled a highly-advanced trade blotter feature that empowers its clients to easily model coverage and execute trades, leverage a streamlined workflow for associating longs/shorts, and benefit from enhanced business intelligence capabilities.

The functionality is garnering rave reviews from Optimal Blue clients. They have noticed a significant increase in efficiencies as related to modeling, adding, lifting and rolling coverage, as well as the planning and executing of trades.

“It is great to be able to see what someone has modeled, rather than relying on screen shots or word of mouth,” said Patrick Ruybal, Risk Management Specialist at All Western Mortgage. Ruybal further explained that his team enjoys being able to set up buy/offers as first-in, first-out, stating “The dealers have gone this route, and we prefer to remain in line with our dealers and lift coverage as needed by order of trade date, based upon the security.”

Another bonus, Ruybal adds, is the ability to lift from multiple dealers at once for the same security. “Optimal Blue’s trade blotter has saved considerable time in this process and reduced the manual task of working within spreadsheets. Our team is free to allocate that much needed time elsewhere.”

Zalman Zwiebel, Secondary Market Director at Ark Mortgage, said that leveraging this feature has dramatically increased efficiency. “What I love most is when I have multiple trades at the same time. I am now able to enter all data at once as opposed to previously entering data separately,” Zwiebel said.

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PRESS CONTACT FOR OPTIMAL BLUE
Robert J. Brandt
Vice President, Marketing & Strategic Alliances
(469) 609-5585
bbrandt@optimalblue.com

As a mortgage originator grows, it becomes apparent that many processes which worked in the past need to be changed to accommodate the larger volume. Most owners or managers are familiar with the origination process and can make good decisions regarding changes to those processes. The secondary market, however, typically is a mystery and not as well understood.

Originators with a best efforts strategy often hear that they can make more money selling mandatory if they have enough volume. However, they have no way of assessing that statement. In addition, there are many other considerations a mortgage company must evaluate before making a decision to sell their loans mandatory.

The improvement in price achieved by selling loans mandatory is often referred to as the best efforts – mandatory spread. This is the difference achieved by pricing to the loan officers based on best efforts rate sheet and the price achieved by selling the loans mandatory. However, this revenue opportunity does not come without a cost. When selling mandatory, the loan originator now has to manage the fall out assumptions and the interest rate risk from lock to commitment of loans at funding – a task that previously was passed on to the best efforts investor. To accomplish this, the originator must implement a hedging strategy.

An originator can implement a hedge strategy in several ways. They can hire the appropriate talent to perform this task or they can outsource this task to a hedge provider to manage it for them. If they decide to manage it in-house, they still must decide what analytical tools to use. This can be a complicated decision and one that will be addressed in a future column. In addition to how to manage the hedge, there are many other internal changes that an originator must address when making the transition to a mandatory commitment strategy. These include:

Loan Delivery: In my experience, this can be more important than the best efforts – mandatory price improvement on an operation. When growing it becomes very onerous to manage each lock individually with the investor. By moving to a mandatory strategy, most originators say the improvement in operations creates about 1 -3 bps improvement to profits. Loans are delivered in bulk instead of individually improving loan delivery efficiencies. Also, loans data is final (no management of loan data during the underwriting process) and loan substitutions in commitments are allowed so there is much more flexibility in delivery.

Lock Desk: For a mandatory strategy, a centralized lock desk is a necessary. Some shops let their loan officers manage the locks. This will not work with a mandatory strategy. I recommend implementing a centralized lock desk first while you still are operating with a best efforts strategy. This will reduce dramatically the work required of a lock desk and will pave the way for the transition to mandatory commitments. When a new lock comes in at a best efforts shop, the lock desk must turn around and lock the loan with the investor. Data changes have to be managed on an individual loan basis. With a mandatory strategy, this does not have to be done. In addition, the lock desk would have to administer any lock changes with the investor based on the investors lock policies. With a mandatory strategy, lock policies are determined by the originator. This includes extensions, relocks, renegotiations and other changes. This means there can be consistent policy that can be published for all loans locked by the originator. In addition, the economics of the lock policy are managed by the originator and not passed along to the investor.

Underwriting: I suggest, although it is not required, that you create a common underwriting guideline per product when selling loans mandatory. Best efforts shops lock loans with the investor as soon as they lock a rate with the customer. It makes sense to underwrite to the investors guidelines. When selling mandatory, the investor is not selected until funding of the loan. Therefore, underwriting to a single guideline gives the secondary markets group the most flexibility to sell the loan to the investor with the highest price. Issues arise when investors have soft overlays that are different from other investors. In that situation, there should be a mechanism to include or exclude investors available for the sale of the loan.

Pricing: Many originators begin a mandatory strategy for selling loans but continue to use best efforts pricing for origination. I highly recommended that the originator transition to one pricing strategy per program to match the common underwriting guidelines. Many loan officers are used to picking the investor with the best price so this might require a cultural change within the organization. And this could take time. If the originator decides to continue to offer pricing based on investor best efforts rate sheets, extra care should be taken to make sure that best efforts pricing offered can be sold mandatory at a profit. Sometimes, investors offer a very aggressive best efforts price for a short period of time. In such cases, it could be more aggressive than mandatory pricing. This typically is a short-term phenomenon and will adjust back to a price that is lower than mandatory. But any origination occurring during that time could experience a loss. I would recommend either (1) adjusting origination spreads to compensate for the difference or (2) locking loans best efforts at the time the lock is taken from the customer.

Investor Management: When going from a best-efforts to a mandatory strategy, it is important to make sure that (1) your current investors are aware of the new delivery strategy and (2) they are evaluated to ensure that they are the best outlets for the new strategy. Many investors offer incentives on the delivery method used by the originator. By notifying investors of the change in strategy, it will ensure that the originator will make the most profit from the change.

There are a lot of opportunities to improve profitability and efficiency with a mandatory strategy. I have seen many customers successfully go from best efforts to mandatory but the work on the above items needs to be done first. For originators who have volume over $10 million per month and a net worth over $3 million that want to get to the next level, this is a worthwhile endeavor. But as you could see from the items described above, many operational changes have to take place to be successful.

This article was featured in the May issue of Mortgage WOMEN Magazine. View the entire article here.

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PRESS CONTACT FOR OPTIMAL BLUE
Robert J. Brandt
Vice President, Marketing & Strategic Alliances
(469) 609-5585
bbrandt@optimalblue.com