Dr. Andy Schell, Ph.D. - The Profit DoctorTM
Selling mortgage loans in the secondary market is complicated.
Dr. Schell is a commercial banking executive and mortgage lending expert
who managed mortgage activity for Bank of America and other smaller banks.
Here are some facts and questions every CEO needs to know.
Secondary Market Sale
Does your loan pricing generate the profit you are expecting?
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Is the hedging pair-off gain or loss aligned with market changes?
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Market Risk
! Every mortgage borrower's interest rate commitment exposes the bank to market risk.
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How is your mortgage division protecting you from market loss?
Mortgage Servicing MSR/SRP
How is an MSR portfolio protected from changes in Price Risk?
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How does a decline in the interest rate environment change the bank's P&L given MSR's LOCOM or Fair Value?
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The Buyers Requirements
! Your credit criteria are replaced by the buyer's credit design.
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What if the buyer's credit guidelines conflict with your approved policy?
Failed Loan Sale
! Every mortgage loan closed and held for sale is a bank asset until it is sold.
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What happens if the buyer does not buy the loan, and how do you monitor this risk of an unsold loan?
Pricing Risk
! The interest rate and fees offered to the borrower establish the future loan profit based on the buyer's offer to purchase the closed loan in 60 days.
How is your pricing margin created?
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If we talk about it, we can fix it. Ask us how.
Dr. Schell, PhD, CPA, warns bank CEOs:
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Unless your head of mortgage worked for a depository, they likely don't know what they don't know about FDIC/NCUA mortgage lending.
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Most of the time, this leads to regulatory findings. We can help you avoid this risk.
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Mortgage company origination executives are amazing salespeople who may know non-supervised lending well, but this differs significantly from the FDIC/NCUA requirements.
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Dr. Schell started working in FDIC mortgage lending in the 1980s, then ran mortgage for Bank of America, and for the last 18 years, he's been helping bank CEO navigate the mortgage lending waters.
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Mortgage is amazingly profitable, but comes with risks that must be quickly contained.
--War Stories over the past 18 years helping banks--​​​​
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ECOA errors may cost $10K each. MBS recently helped a bank fix thousands of these errors just before the FDIC examination.
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​Mortgage loans closed but not sold expose the bank to significant price risk. MBS recently exposed this risk for a bank.
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Loan Origination System (LOS) conversions are difficult to implement. The MBS team has helped many FDIC and NCUA companies finish stalled conversions.
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MBS is the Encompass Admin for many FDIC banks, where we've addressed the Encompass online conversion challenges. ​
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