Verification, Non-QM Hedging Tools; Builder Trends That Impact LOs; Student Debt News; Automation and Processing
Products, Services, and Software for Brokers and Lenders
Four Methods to Hedge Non-QM & Maximize Profits: In today’s growing non-QM market, selling best efforts is leaving value on the table. Accumulating bulk and improving execution is possible, but it involves taking price risk on the non-QM loans, and this requires hedging. A new technical brief evaluates four primary methodologies used by capital markets professionals: forward sales, correlated hedges, hedging to expected CPRs (i.e., prepayment profile), and hedging to a stochastic model. While forward sales offer direct risk transfer, their utility is limited and it doesn’t offer discernable improvements in execution. Correlated hedges provide a data-driven alternative, but face challenges regarding loan data quality and maturity mismatches. As a result, many capital markets professionals are choosing to align hedges with expected prepayment profiles. The fourth method involves hedging to a stochastic model, a more precise but complex method of valuing and hedging expected future cash flows. The technical paper also highlights an emerging preference for SOFR swaps, by using liquid and easily accessible Eris SOFR Swap futures, instead of US Treasuries. As it is more efficient to forecast and hedge forward rate expectations using the SOFR swap market, it is becoming the benchmark of choice for efficient modeling and hedging. Whether you are managing a small pool or a massive portfolio, understanding these four methods is essential for maximizing your execution and profitability. Read the technical paper and contact John Douglas.
Less back-and-forth. More first-time-right verifications. Truework replaces manual verification waterfalls with a single automated platform, so underwriters, LOs, and ops can cut down the document chasing, conflicting numbers, and last-minute corrections. Lenders see up to 50 percent cost savings on verifications, with faster turn times, higher accuracy, and stronger R&W relief. Trusted by 4 of the top 5 lenders in the U.S., Truework gives your team verification results they can rely on. Learn more.
The Chrisman Marketplace is a centralized hub for vendors and service providers across the mortgage industry to be viewed by lenders in a very cost-effective manner. We’re adding new providers daily, so check back often to see what’s new. To reserve your place or learn more, contact us at info@chrismancommentary.com.
Thought Leadership
By Steve Butler, CEO at TRUE, has some thoughts on automation on the “front end” of the loan processing. “The biggest misconception in mortgage automation is that efficiency is unlocked in underwriting or post-close, when in reality the cost and friction are already embedded by the time a file gets there. When intake data is inconsistent or unresolved, every downstream improvement becomes marginal because teams are still correcting upstream errors. What feels different now is that AI can finally stabilize the front end by extracting and validating data early, turning days of back and forth into near-instant clarity. That shift forces a strategic decision for lenders: continue optimizing bottlenecks or rebuilding the foundation. The firms that move automation upstream will operate on a different cost curve.”
Jeremy Potter, industry consultant and the host of “Now Next Later” every Monday, has an opinion about efficiency, AI, and lender workflow. Mortgage’s core inefficiency is no longer a lack of tools but a lack of shared context, where disconnected systems create fractured borrower experiences and limit real-time decisioning. Lenders are now facing a more fundamental choice: continue optimizing individual platforms or invest in unifying data so signals can flow across the entire lifecycle. What feels different is that AI is only as effective as the context it receives, and most stacks are not built for that. The opportunity is not incremental efficiency but a shift from reactive workflows to proactive engagement. The firms that solve for connected data will redefine how decisions are made and when they happen.
Yes, But is it Permanent?
We’ve learned that presidential executive orders are not law, or regulations, but meant as intentions. What about court cases?
Borrowers scored a major victory on Wednesday after a federal appeals court rejected an emergency appeal by the U.S. Department of Education to delay student loan relief for tens of thousands Americans who claim they were defrauded by their school. The ruling, the latest in a series of losses for the Trump administration in the Sweet v. McMahon case, paves the way for the department to automatically discharge the student loans of roughly 205,000 borrowers.
LOs and Builder Trends
Buoyed by the positive momentum from the recent passage of the 21st Century ROAD to Housing Act, industry stakeholders gathered in Washington, D.C., at the National Housing Supply Summit to discuss the solutions, innovations, and real-world examples shaping the housing supply landscape. Builder’s Vincent Salandro has some takeaways from a recent builder that any lender should be aware of.
“Affordability Is Fundamentally a Supply Issue.” From the first to the final session of the Summit, a prevailing theme was the relationship between affordability and supply. Zillow chief economist Mischa Fisher outlined the relationship while noting that in areas with fewer building restrictions, more affordable housing has been able to be brought to the market. NAHB chief advocacy officer Ken Wingert shared that regulatory costs often account for between 20-40 percent of construction costs, hindering the production of housing and contributing to the affordability challenges common in the current housing market.
From simple solutions such as developing smaller lots, smaller product, and more diverse housing types to more innovative and unique opportunities such as rethinking the definition of ownership and creative financing options, the panelists during the Summit shared how innovation can lower build costs, add more housing units, and more efficiently utilize housing units already in the pipeline.
“Smaller Lots: More Affordability, More Supply.” One of the clearest, high-level ideas to emerge from a session focused on zoning, permitting, and code bottlenecks was simple: allow smaller lots. Lot size reform as a high-impact lever that directly reduces costs while unlocking meaningful supply gains. Shrinking lots lowers land costs and enables smaller, more attainable homes to be built in tandem… Taking a national perspective, allowing smaller lots more widely across the country over the past two decades could have allowed the production of millions more homes.
“Design Standardization as a Bottleneck Solution.” The process of housing approvals can be significantly disruptive to timelines and costs. Design standardization, such as pre-approved plans, standard frameworks, and pattern books, were highlighted as practical tools to accelerate production by removing friction from the entitlement process. If every project must navigate a bespoke approval process, timelines stretch, costs rise, and fewer homes can be built. Standardization flips that dynamic by front-loading community input and aligning expectations early. A more predictable path from concept to construction can translate to cost and efficiency advantages to help deliver more affordable housing.
“There Are No One-Size-Fits-All Solutions.” Housing solutions must be tailored to local conditions. While the housing shortage is national in scale, many of the causes and fixes are deeply local issues. Policies that succeed in one market may fail to gain traction or fall flat in other parts of the country. Even seemingly universal ideas like reducing parking minimums must be adapted to local realties.
“Data Is the Key to Technology Efficiencies.” Solutions that can help solve pain points or automate arduous tasks are only as good as the data used to build them. Data that is biased or incomplete can lead to incomplete or biased solutions. As a result, improving systems and housing outcomes is not just about faster processes, it also requires transparent and complete data systems to inform them.
“Offsite Practices Are Flexible Tools.” Offsite, modular, and manufactured housing should not be boxed into narrow product categories. The reframing was shared to push back on the common perception that modular or manufactured housing is limited to certain aesthetics of segments. Each are methods of building and tools that can be applied across a wide range of housing types, from single-family homes to multifamily and infill development.
“Confusion, Regulation Contribute to Limited Offsite Adoption.” Offsite construction adoption is still constrained in the United States relative to international markets. Many of the challenges have less to do with the factories themselves and more to do with everything around them. Inconsistent rules across jurisdictions have made it difficult to scale manufacturing efficiently. Additionally, financing gaps have slowed to adapt to manufactured housing, as many interested buyers do not have an easy way to access financing manufactured homes.
“Financing Systems Are Mismatched, Not Broken.” A core challenge is how capital is structured and deployed. Historically, the U.S. has demonstrated the ability to scale housing when financing tools are intentionally designed to support it. The current need is less about new subsidies and more about modernizing delivery mechanisms to provide flexible, lower-cost, long-term capital. Many existing tools remain fragmented or underutilized while emerging potential opportunities like small-scale infill development face barriers due to a lack of standardized, repeatable models. Without consistency and scalability, high-potential supply channels such as consumer-led infill remain difficult to unlock at scale.
“Rethink What Ownership Looks Like.” Expanding housing supply may require rethinking how we think about homeownership. Traditional, all-or-nothing ownership models can limit access for middle- to low-income households and constrain innovation. There are emerging models aiming to lower barriers to entry while making more efficient use of the existing housing stock: separating land and home ownership to reduce upfront costs, shared equity models that expand purchasing power without increasing monthly payments, and co-op or co-living arrangements that broaden access to homeownership and better utilize underused space.
Capital Markets
As traders brace for the war in Iran continuing into April, with Iran and Israel continuing to exchange missile fire even after President Trump’s latest push for peace talks, noise and speculation in the headlines has pushed longer-term interest rates to their highest levels in months; mortgage prices fell and spreads widened yet again yesterday. The day's $44 billion 7-year note auction met weak demand, making for the third consecutive disappointing auction of this week.
Mortgage rates predictably rose across programs again in the latest Primary Mortgage Market Survey from Freddie Mac, with the 30-year rate rising for the fourth straight week to now be 40-basis points higher than the local low from February. For the week ending March 26, the 30-year and 15-year rates rose 16-basis points and 21-basis points to 6.38 percent and 5.75 percent, respectively, the highest since August, though 27-basis points and 14-basis points lower from a year ago.
Today’s economic calendar contains the lone data point of final March Michigan sentiment, due out later this morning. The sentiment survey includes inflation expectations that will be closely scrutinized. At least three Fed speakers are also scheduled: Richmond’s Barkin, San Francisco’s Daly, and Philadelphia’s Paulson. We begin Friday with Agency MBS prices worse about .125 versus Thursday’s closing, the 2-year yielding 4.00, and the 10-year yielding 4.46 after closing yesterday at 4.42 percent.