With fluctuations in the mortgage bond market, mortgage lenders are constantly at risk for mortgage portfolio runoff. High margin lenders issue rates higher than the market everyday. Even a 0.25% drop in average interest rates can create a large amount of mortgage portfolio runoff due to the fact that there is always a handful of refinance only lenders offering lower market rates that your average retail mortgage shop.
For some lenders, the risk is in their own portfolio. For correspondent lenders, the risk lies in possible early payoff penalties (EPO).
Most servicing lenders have a policy in place to reach out to a customer when a payoff request is ordered. This issue with this type of retention effort is that in most cases it is too late. At this point the customer has likely applied with another lender, pulled credit, and provided financial documents to the new lender.
Mortgage lenders, brokers, and banks need an early warning system in place for mortgage portfolio runoff and early payoff risk that alerts them earlier in the origination cycle when a customer is shopping for a new loan.
We aggressively monitor both a lender's portfolio and loans they have sold correspondent to warn them of early mortgage related activity. If your borrower applies for a mortgage with another lender, you are quickly notified. If your customers home is listed for sale, you a quickly notified.
