The Pipeline

In February, many of our talented staff are presenting at multiple conferences and webinars around the country (see full list below). In this special edition of the Pipeline, we present articles on two of the topics we are focused on: pipeline risk management and the 2026 CCAR scenarios.

The business challenge of mortgage banking can be described as originating mortgage loans for sale profitably amid uncertainty. Stabilizing profit margins and managing capital and debt require mortgage banks to forecast the share and timing of locked applications that close. All—and only—locked loans that fund must be hedged against the timing and size of adverse price movements caused by changes in mortgage rates during the period between lock and settlement, which can be a few months.

On February 4, the Federal Reserve Board (Fed) released two scenarios—baseline and severely adverse—for the 2026 Comprehensive Capital Analysis and Review (CCAR). These scenarios describe three-year trajectories based on key economic indicators. Of the 28 variables, the ones used by Andrew Davidson & Co., Inc.’s (AD&Co’s) mortgage models are home price (CoreLogic U.S. National HPI); interest rates (3-month, 5-year, and 10-year Treasury, prime index, and mortgage primary rate); and national unemployment.