Mortgage pipeline loan pricing—like all valuations—demands comprehensive, accurate loan-level data, access to current capital markets pricing, a solid understanding of fair value accounting rules, and the technology to bring it all together. The results can be surprising—and sometimes counterintuitive.

At Level1Analytics (“L1a”), we apply Level 1 pricing to value most pipeline loans, running them through our proprietary L1aLoans slotting and pricing system. This tool delivers highly accurate product slotting by applying real-time origination market prices and risk-based adjustments.

Our data engine draws from investor guidelines to assess product eligibility for each loan, then applies lenders’ rate sheets and adjustment rules to determine valuation. The result? Quoted prices for identical assets in an active market as of the valuation date—meeting ASC-820’s Level 1 pricing standards.

Among the many loan-level characteristics that impact valuation, LTV and FICO play a particularly large role. It stands to reason that high-LTV loans would command lower prices in the secondary market due to greater risk, just as lower credit scores would lead to discounts. So, you’d expect pricing to decline steadily as LTV increases within each FICO band.

But that’s not what we see.

We analyzed conventional fixed-rate loans by pricing a 60% LTV / 800 FICO loan, then repricing the identical loan across different LTVs and FICO ranges—holding all else constant. The graph below shows a surprising pattern: as LTVs exceed 80%, prices actually increase across FICO bands. Why? PMI. Higher LTV loans require mortgage insurance, transferring risk from lender to insurer—thereby supporting higher prices.

This analysis only changes two variables—LTV and FICO—but many more impact loan value: property type, occupancy, loan purpose, loan size, delinquency status, geographic location, and beyond.

For truly accurate pipeline pricing, you need to consider all of it.
Why guess—when you can be right?