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MBA conference session spotlights MSR valuation best practices

MBA conference session spotlights MSR valuation best practices

With the rewards of investing in the residential mortgage servicing rights (MSR) asset come significant accounting and management challenges. Many of those challenges are based on how frequently the asset can change in value and the overall opaqueness of what’s causing the change in value.

What's Different About Today's Rising Rate Environment?

What's Different About Today's Rising Rate Environment?

It is easy to generalize what rising interest rates mean to a financial institution’s risk management plan, but the current rising rate environment is somewhat different and has a few unique features that may alter risk management decisions for banks and credit unions.

Blind spots are the biggest risk in financial modeling

Blind spots are the biggest risk in financial modeling

What happens if right after you finalize your financial models and get ready to make critical pricing or balance sheet decisions, your head of risk modeling leaves your institution with little notice, and to your dismay, little documentation? While your former model developer was brilliant, your institution is now left with a range of financial models that may or may not be accurate or effective.

Don’t let your CECL road map turn into a CECL roadblock

Don’t let your CECL road map turn into a CECL roadblock

Jeff Prelle, Head of Risk Modeling at MountainView, a Situs company, served as conference chair at the CECL 2018 Congress Conference.

When it comes to Current Expected Credit Loss (CECL) planning, modeling and implementation, the consensus among financial institutions is that there is no consensus, because no two financial institutions are alike. At Situs, we often reinforce the importance of taking a strategic approach to CECL modeling and implementation. After all, CECL’s tentacles touch a wide range of functions within a financial institution, from model and credit risk to accounting and information technology (IT). But when it comes to achieving CECL milestones and tactics, what will work for one bank, credit union or lender may not work for another.

Ginnie liquidity initiative discussion added to MSR webinar today

Ginnie liquidity initiative discussion added to MSR webinar today

An official with Ginnie Mae recently announced a new initiative that seeks to address concerns about the liquidity of nonbank issuers in Ginnie’s single-family mortgage-backed securities (MBS) program.

New e-book series discusses evolution of liquidity risk management strategy

New e-book series discusses evolution of liquidity risk management strategy

As we approach 2019, banks and credit unions are focusing on liquidity, which has recently become a key focus of regulators who have highlighted a reduction in liquid assets at banking institutions. Since the 2008 financial crisis, banks and regulators have taken significant steps to monitor liquidity risk, but new liquidity concerns have emerged, and financial institutions need to ask themselves whether they can defend their liquidity risk management strategy to regulators.

Periodic validations of MSR valuation models can create an advantage

Periodic validations of MSR valuation models can create an advantage

While depository institutions are required to have their residential mortgage servicing rights (MSR) valuation models validated, other businesses don’t face the same regulatory requirements and are potentially missing out on the benefits of periodic validations.

What’s really at stake with your institution’s CECL data?

What’s really at stake with your institution’s CECL data?

Since the Current Expected Credit Loss (CECL) standards were finalized in June 2016, one major area of concern among bank and credit union CECL teams and their CFOs has been that the new set of loan loss calculations will require extremely granular and high-quality data.

What drives trade success for whole loans in the secondary market?

What drives trade success for whole loans in the secondary market?

There is a transparent market for newly originated residential mortgages conforming to the guidelines set by Fannie Mae, Freddie Mac, Ginnie Mae and loan aggregators. There is also a very active but much less transparent secondary market for loans that didn’t meet those guidelines and for seasoned loans that are performing, re-performing or non-performing.

Community banks face rise of liquidity risk, FDIC warns

Community banks face rise of liquidity risk, FDIC warns

In 2017, the FDIC released a paper, Community Bank Liquidity Risk: Trends and Observations from Recent Examinations, which outlines key challenges facing community banks and attempts to raise awareness on liquidity issues facing banks. Now, in 2018, a growing number of banks face funding gaps, creating a renewed interest in the FDIC’s paper.

A decade after the crisis, we are still learning key lessons about liquidity risk

A decade after the crisis, we are still learning key lessons about liquidity risk

“Wow, I can’t believe I can say that the financial crisis was a decade ago,” said Chris Mills, Managing Director of Model Validation Services for MountainView, a Situs company, during Wednesday’s liquidity risk webinar. “It doesn’t feel like a decade.”

How will Hurricane Florence impact MSR values?

How will Hurricane Florence impact MSR values?

Hurricane Florence caused between $38 billion and $50 billion in damage and economic losses, according to an article in The Wall Street Journal on Sept. 21. Within this estimate is damage to an estimated 391,000 homes with mortgages, including an estimated 283,000 homes in 18 North Carolina counties that FEMA has declared disaster areas, according to a Sept. 25 article by the Mortgage Bankers Association.

Liquidity model validation: A critical component of liquidity risk management

Liquidity model validation: A critical component of liquidity risk management

So many decisions and transactions affect liquidity, which is why financial institutions are taking extra steps to implement a robust liquidity risk-management strategy that will help identify, monitor, measure and control the institution’s day-to-day liquidity management and ensure they are adequately prepared for unforeseen liquidity demands.

What did 100 banks say in a CECL implementation progress survey?

What did 100 banks say in a CECL implementation progress survey?

Selecting a forecasting methodology is at the core of banks’ loss-estimation process for the Current Expected Credit Loss (CECL) standard and a telling overall snapshot of banks’ CECL implementation progress to date. Among 100 banks surveyed nationwide, 39% have already selected their forecasting methodology, according to a new white paper by MountainView Financial Solutions, a Situs company.

Are banks and credit unions too comfortable with their liquidity positions?

Are banks and credit unions too comfortable with their liquidity positions?

Amid very positive economic conditions nationwide, many financial institutions have excess cash and liquidity. At the same time, while economists can only speculate when we might start to see signs of the next recession, banking regulator expectations about liquidity risk management are at an all-time high.

Five factors affecting credit union deposits

Five factors affecting credit union deposits

In today’s economic environment, financial institutions of all shapes and sizes need to think long-term about their balance sheet and business decisions. Credit Unions, in particular, are unique in that a large percentage of funding comes from member shares, money markets and Certificates of Deposit. Since deposits are a main source of funding, Credit Unions need to keep in mind the following five factors affecting deposit performance:

The CECL paradox and its impact on financial comparability

The CECL paradox and its impact on financial comparability

The Financial Accounting Standards Board (FASB) did not prescribe a specific approach when it required the Current Expect Credit Loss (CECL) standard, leaving it up to financial institutions to determine the best path forward. Since Allowance for Loan and Lease Losses (ALLL) is no longer an apples-to-apples comparison, how will this impact a financial institution’s ability to compare itself to its peers?