Mortgage Hedging Policy
The purpose of this Mortgage Hedging Policy Template is to address hedging pipeline and warehouse risks of a bank, credit union, fintech company, or other type of financial institution that are consistent with the overall risk management process of an organization. In general, the objective of hedging is to mitigate market risk and protect the value of such mortgages and commitments from the initial commitment date until the loan is funded and sold. The primary objective of hedging mortgage banking activities is to offset changes in the fair value of the mortgage pipeline and warehouse positions in the most cost effective and efficient manner. Mortgage hedging strategies help level the peaks and troughs of normal market movements to produce a consistent and predictable revenue flow.
Table of Contents
- Purpose and Contents – Topic 1
- Policy Statement – Topic 2
- Risk Metrics – Topic 3
- Best Execution – Topic 4
- Hedge and Loan Pool Optimization – Topic 5
- Risk Identification and Segmentation – Topic 6
- Hedge Coverage, Activity and Techniques – Topic 7
- Hedge Position Management – Topic 8
- Risk Exposure Reports – Topic 9
- Audit Policy – Topic 10
- Staff Training – Topic 11
- Retention of Documentation – Topic 12
This Mortgage Hedging Policy Template (approximately 14 pages) is available to purchase from BankPolicies.com in Microsoft® Word format.
NOTE: The complete contents of this template are also included in the Mortgage Loan Policy Template.
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