Subproduct Pricing

Why Use 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.  

Mandatory – The amount delivered into subproduct pricing cannot exceed the subproduct maximum loan amount. If it becomes necessary to cancel a Delivery Commitment (DC) and lock at a higher subproduct maximum, the cancelled 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. When a DC is cancelled prior to price expiration the fee will be based on the full amount of change. When a DC is allowed to expire the fee will be given the benefit of tolerance.

Pricing comparison – based on a 30 yr, 45-day price, looking to make one point (this pricing is for illustration only).

To access the subproduct pricing advantage, you must select the associated subproduct price category from the dropdown in the delivery commitment process.

If you lock into subproduct pricing and deliver an amount that would fit into a lower subproduct max, you will not receive the pricing advantage of the lower delivery amount. You will receive the price for the subproduct price based on your actual DC.