Understanding MCM’s Forward Builder Commitment Quote Sheet

by MCM Analyst 3/20/2013

Understanding MCM’s Forward Builder Commitment Quote Sheet
 
To help mortgage bankers determine pricing and hedging for builder commitments on rates and fees, MCM offers a Forward Builder Commitment Quote Sheet.

Below is a sample MCM forward builder commitment quote table showing various combinations of upfront fees, rates and points for different commitment periods ranging from 90 day to 360 days. Each table shows a combination of rates and points with the resulting upfront fee shown in the box.

FHA/VA

180 DAY RATES

DISC.

3.00%

3.50%

4.00%

4.50%

 

 

 

 

 

-2.00

 

7.30

2.37

0.43

0.06

-1.00

 

6.34

1.72

0.21

0.02

0.00

 

5.40

1.18

0.09

0.00

1.00

 

4.54

0.83

0.05

0.00

2.00

 

3.70

0.52

0.02

0.00

3.00

 

2.99

0.35

0.01

0.00

4.00

 

2.31

0.20

0.00

0.00

 

For example, a 180-day indication for 30-year FHA/VA loans with a zero point cost at a maximum rate of 3.5%, the upfront fee would be 1.18 points on the commitment amount.

MCM’s Forward Builder Commitment Quote Sheet can be configured in multiple ways to meet bankers’ needs. Below is another table sample.

CONV.

 

180 DAY DISC.

 

RATES

-1.00

0.00

1.00

2.00

 

 

 

 

 

3.13%

 

6.48

5.55

4.63

3.81

3.25%

 

5.48

4.59

3.73

2.99

3.50%

 

2.95

2.18

1.50

1.02

3.75%

 

1.92

1.34

0.83

0.53

4.13%

 

1.10

0.72

0.40

0.24

4.25%

 

0.57

0.35

0.17

0.10

4.38%

 

0.46

0.28

0.13

0.08

 

In this example, a 180-day indication for 30-yr FNMA/FHLMC loans with a -1 point rebate to costs at a maximum rate of 4.125% would equal 1.10 point on the commitment amount.

Neither table takes into account any loan level pricing adjustments, which would be applied as prescribed by the agency and accounted for separately by each loan. 

MCM quote sheets can be customized to reflect different loan originator compensation levels, profit margin, servicing value, percentage expected to close under the commitment, early delivery amounts, cost of funds, and provision for miscellaneous fees (for underwriting, funding, appraisal, etc.).

© MCM 2013