Understanding Subproduct Pricing

Subproduct Pricing

Subproduct pricing provides a pricing advantage based on the loan size. Analysis of loan data has shown that lower loan amounts have a slower pre-payment speed. From a pricing standpoint, some investors are willing to pay a better price for loans that will stay on their books longer.  

Both MPF Xtra Mandatory and Best Efforts have the advantage of subproduct pricing.

Mandatory – If it becomes necessary to cancel a Delivery Commitment (DC) and lock at a higher subproduct maximum, the DC could be subject to a pair-off fee. You can deliver a lower loan amount, and as long as you are within tolerance, there will not be a pair-off fee. If outside of tolerance, there could be a fee (or credit) and it will be based on the full amount your DC has changed. 

Best Efforts – You may change the loan amount, term or interest rate without incurring a fee, as long as you stay in the same maximum loan amount grid (conforming vs. high balance loan). Be sure to contact the Service Center (within a day of requesting funds) to make any necessary changes so the terms of the DC and the actual loan match at the time you are requesting funds.