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Compass Analytics provides a range of mission-critical services to our clients. With the support of the superior analytics of CompassPoint™, Compass staff can spend time training and educating clients on not only the reports and technology, but also industry best practices, improved best execution strategies, the best investors for a client’s product and other important risk management strategies. Compass looks at every relationship as a long-term partnership and prides itself on a hands-on approach to all clients.

Outsourced Services

Hedge Advisory Service

Compass brings the Secondary Marketing expertise to lenders who subscribe to the economies provided by outsourced hedging or those lenders who want to capitalize on Compass’s secondary expertise and staff.

Compass’s Outsourced Hedge Advisory clients range from those companies hedging as little as $10 million per month to Top 50 lenders hedging in excess of $700 million per month. Compass assigns a two-person Hedge Manager team to every client – a Senior Hedge Manager and a Trading Assistant. This two-tier relationship allows Compass to focus on contributing strategic/profit suggestions to its clients as opposed to simple execution of hedges.

Upon establishing a relationship, this two-person team provides daily training, report review and interpretation and thorough Profit and Loss reconciliation. The team reviews a lender’s current list of investors to ensure that a lender is using the best providers and constantly analyzes this list to stay current.  As the relationship progresses and matures, Compass positions itself as a partner in profitability. Hedge Managers work closely with Secondary departments to train people and empower them to become knowledgeable, experienced and comfortable with the broad array of Secondary Marketing responsibilities. Again, using CompassPoint™ as the support behind the service, Hedge Managers can make accurate and concise decisions while the ease and flexibility of our technology allows Hedge Managers to control the decisions and manage the needs of the client, right down to the ability to make or change their own reports.

Moving to Hedging

In today’s competitive market, lenders need to stay on top of current market trends, employ current, comprehensive analytics and ensure they are maximizing the return on each and every loan sale.  Compass has worked with many lenders, from those embarking on a broker to banker transition to the larger lender who is just now experiencing competition or market compression such that hedging is being sought after to increase their competitive edge.

There are four key drivers for embarking down the path of hedging:

  1. Improved Execution/Profitability on Loan Sales:
    • Realize Mandatory/Best Efforts Spread
    • Sell Specific Closed Loan Best Execution Policy
    • Initiate Bulk Delivery
  2. Streamlined Operations:
    • Lock/Sell to Investor at Closing, Not Lock
    • Move to Common Guidelines
    • Experience Shipping & Execution Efficiencies
  3. Establish Strategic Relationships:
    • Widen Investor Base and Delivery Type
    • Agency Relationship with Option for Retaining Servicing
    • Counteryparty Relationships with Broker/Dealers
  4. Maintain/Expand Profitable Market Share:
    • Ability to Price More Aggressively
    • Ability to Identify Profitable Originators
ASP Model

Clients who wish to execute their own trades but need state-of-the-art analytics and model management to back their decision making may opt for our ASP Model which provides for a service bureau relationship, with the staff at Compass providing confidential settings management and timely risk reporting. Compass manages the maintenance and settings of CompassPoint™ and sends the client a daily report set upon which they can make their own trading decisions.  If the client chooses, Compass will provide counsel and continue to act as a hands-on consultant, however, it is at the client’s discretion as to how much interaction or input they would like from Compass. Please refer to the Mortgage Banking Solutions pages to learn more about the analytics we host.

Software Licensing

Compass Analytics proprietary software, CompassPoint™, provides an intuitive and broad range of tools, analytics and reporting to enable mortgage capital markets participants to value, model, hedge, trade and account for the entire spectrum of new and seasoned mortgage products and the financial instruments with which they are hedged. Compass can host CompassPoint™ on behalf of the Client on Compass’s secure servers or Client can host/install CompassPoint™ at the client’s site.

Third Party Valuations

Compass has the most contemporary, defensible analytics supporting our Third Party Valuation services, providing clients with outsourced pipeline valuation for periodic reconciliation and financial basis establishment to mark-to-market reports for internal or external auditors. Compass provides Third Party Valuation across all collateral types and leverages its customers large deal flow in order to apply current market levels and spreads to valuations.

  • Cash flow valuations of non-agency product using current capital structures, model assumptions, credit spreads and loan level subordination levels when available, all calibrated to market levels.
  • Accurate non-conforming (Jumbo and Alt-A Fixed and Adjustable) valuations by tracking investor spreads daily and calibrating spreads to actual bulk execution of Compass clients.
  • Conforming investor, agency, coupon conforming best execution for retained, co-issue and AOT execution
  • Compass leverages the accuracy of its valuation throughout a loan’s life cycle which provides far more accurate hedge performance analysis, income and cash flow forecasting.
  • Flexible grouping and cross-hedge capabilities provide for accurate product and position level profit/loss reporting.
  • Historical analysis including fallout and relative originator profitability on a loan office/broker or product level.
Consulting

The decision to employ a third party and/or outsource any key component of a lenders operation is a big decision and requires a trustworthy partner who is willing to work with a company in the manner in which the company is most comfortable. Compass approaches any new relationship as a long-term partnership and regularly works with clients on a consulting basis in the areas of mortgage valuation, risk management, production, operations and best execution.

If interested in learning more about consulting opportunities, please call Kellie Kramer at 415-462-7500 or email kkramer@compass-analytics.com.