In 2011, JVB established a Mortgage Group to include a trading desk for “to-be-announced” or “TBA” securities with the objective of providing liquidity and hedging services to middle market mortgage originators that hedge their mortgage pipelines. Today, JVB’s Mortgage Group now offers a range of solutions for middle market mortgage originators seeking to enhance mortgage pipeline execution and overall portfolio profitability
TBA Trading – assists clients by offering hedging capability via access to the TBA trading markets. The focus is manage and hedge the interest rate risk of originator clients mortgage pipelines
Agency MBS Trading – provides liquidity and improved execution away from the government-sponsored-enterprises (“GSEs”) (i.e. Ginnie Mae, Freddie Mac, Fannie Mae). JVB currently has three dedicated Agency MBS cash traders within the Mortgage Group of which two traders are focused on Agency MBS fixed rate pools and one trader is focused on Agency MBS ARM trading.
Gestational Repo Financing – short term repo product that allows institutions seeking incremental yield to invest cash into a security that meets the definition of a “security” under Section 3(a)(10) of the Securities Act and Section 8-102 of the UCC and is deemed an investment security governed by Article 8 of the UCC. The GNMA security carries the full faith and credit of the U.S. Government, giving it a zero risk weighting. For the mortgage originator client, gestation repo brings capital markets financing capability to a client base that are otherwise beholden to bank controlled warehouse funding lines. Gestation repo also increases the velocity of the pooling capability for GNMA issuers, while at the same time reduces funding costs and improves the mortgage client’s cash position.
Clients leverage JVB’s capital markets expertise to increase profitability by:
- Efficiently hedging interest rate risk via the TBA GSE market
- Increasing the velocity of clients’ GSE pooling process through Gestational Repo Financing
- Improving trade execution for new production GSE pools
- Enhancing clients’ capital markets visibility through communication of market pricing, trade conditions, and updates regarding regulatory changes