For Loan Sellers
For loan sellers, PandiFi represents an alternate source of liquidity. PandiFi V1 is focused on agency eligible U.S. conventional mortgages i.e., mortgage loans that are originated to Fannie Mae or Freddie Mac's guidelines. Moreover, the homogenization fee is explicitly set to be equivalent to agency LLPAs to make comparisons relative easy for loan originators.
Case Study: Conventional U.S. 1-4 Family Mortgages#
Say you're an originator and would like to sell a conventional loan with an interest rate of 3.00%. The default option is selling to Fannie Mae or Freddie Mac:
| Assumptions | |
|---|---|
| Guarantee Fee | 0.45% per annum |
| Servicing Fee | 0.25% per annum |
| Buy-up Multiple | 5x |
| Servicing Multiple | 5x |
| Valuation | |
|---|---|
| Servicing | 0.25% * 5 = 1.25% |
| Buying up guarantee fee | (3.00 - 0.45 - 0.25 - 2.00) * 5 = 1.50% |
| UMBS 2.0% Price | 101.50% of the loan amount |
| Loan Execution (excluding LLPAs1) | = 104.25% of the loan amount |
Now say that a homogenizer exists that supports conventional mortgage loans with a 3.00% interest rate. And say it is trading at 105.25%. Then an originator would net an additional 1.00% in profit margin by selling through PandiFi rather than Fannie Mae or Freddie Mac.
Other Loan Products#
While V1's focus is Conventional U.S. 1-4 Family Mortgages (i.e., loans saleable to Fannie Mae and Freddie Mac), the PandiFi protocol supports any product that can be represented by the V1 data dictionary. If you'd like to use PandiFi to distribute another loan product, please contact us and we'd be happy to help you achieve your goals.