The question by borrowers often comes up with brokers, “What happens to my loan after it closes? “Independent mortgage banks” almost always sell the loan into the secondary markets. Think of Orion as a toy manufacturer: factories produce toys, sell them to stores, and then take the money and produce more toys, sell them, and on and on. Our brokers and Orion manufacture quality loans, we sell them into the secondary markets, and then take the money and make more loans.

We mention this because much of Orion’s product is sold, either directly or eventually, to Freddie Mac and Fannie Mae. These two Agencies often do an “end-run” around the large aggregators, marketing directly to the small and mid-sized lenders, and their efforts are well known in the industry. But smaller lenders may not have the expertise or experience, like Orion does, in analyzing some basic decisions between selling loans directly to Freddie and Fannie (through the cash window) or securitizing loans themselves. Fortunately, Orion has the expertise and financial where withal to analyze multiple executions every day.

To dive into the weeds here a little, when Orion sells loans via the “cash window,” Fannie and Freddie aggregate the loans from a large pool of lenders and securitized them as a mortgage-backed security (“MBS”). Why would Orion choose to sell in this fashion rather than create our own security? Simple: speed and efficiency. The agency cash window typically alleviates warehouse line concerns, a problem which plagues many originators, by way of faster fundings.

Also, borrower retention is maintained as well, allowing us to continue to service your borrowers by handling their monthly payments. Some lenders selling their loans to larger lender aggregators sell servicing rights as well. Orion may or may not do this. The cash window allows lenders to retain their customer base, while allowing them to continue to originate new loans.

Orion will continue to sell to Fannie or Freddie cash window desks, or to aggregators, to create our own MBS if that gives us the best execution. Most lenders don’t have the diversity and options in selling loans. Having options in the secondary markets helps your borrower’s rates, just as a toy manufacturer selling its products to the best outlets can benefit the consumer!

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