What is TBA (To Be Announced)?
TBA (To Be Announced) is a trading convention for agency mortgage-backed securities where the buyer and seller agree on coupon, maturity, settlement date, and face amount, but the specific pools to be delivered are not identified until shortly before settlement. TBA trading provides enormous liquidity to the agency MBS market because it standardizes the product; any pool meeting the delivery requirements can be used. TBA prices serve as the benchmark for mortgage rate-setting. The whole loan market does not have TBA; every trade is specified, which is why whole loans are less liquid and require more due diligence.
How LoanBook Uses TBA
LoanBook references TBA levels for relative value analysis. The spread between whole loan yields and TBA-implied yields indicates the premium investors demand for moving outside the agency market. TBA data is used in the market snapshot for the Seller Portal.
Frequently Asked Questions
Why can't whole loans trade TBA?
TBA requires standardization; every pool must be interchangeable. Whole loans are heterogeneous (different borrowers, collateral, geographies, underwriting), so they cannot be delivered interchangeably. Each whole loan trade requires specific pool identification and due diligence.
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