Probability that a prospective borrower will not complete a mortgage loan transaction and will 'fall out' of it. High fallout risk is usually created when the finalization of the mortgage deal is contingent upon another deal such as the sale of a property. If the deal does not go through, it is said to have fallen out of the lender's pipeline of loans. Banking practices require that the offered mortgage interest rate must be held for 60 days or more while the borrower is under no obligation (but has the right) to consummate the deal. The lender thus has to hedge against the possibility of a market interest rate increase in the interim through means such as a put option.
Related information about fallout risk:
- Fallout Risk Definition | Investopedia
The lending risk that occurs when the terms of a loan are confirmed simultaneously with the terms of a property sale. Because the mortgage terms are set but the ...
- Fallout Risk - Financial Dictionary - The Free Dictionary
A type of mortgage pipeline risk that is generally created when the terms of the loan to be originated are set at the same time the sale terms are established.
- Fallout risk - definition of Fallout risk by the Free Online Dictionary ...
v. fell (f l), fall·en (fô l n), fall·ing, falls. v.intr. 1. To drop or come down freely under the influence of gravity. 2. To drop oneself to a lower or less erect position: I fell ...
- Fallout risk - Legal Dictionary - The Free Dictionary
In a best-efforts transaction, the lender passes the interest rate and fallout risk to the investor, with the understanding that the loan will be sold to that investor.
- What is fallout risk? definition and meaning
Definition of fallout risk: Probability that a prospective borrower will not ... High fallout risk is usually created when the finalization of the mortgage deal is ...
- Thoughts, Parameters, and Considerations when Measuring Fallout ...
Larkspur, CA 94939. 415-925-2816 www.compass-analytics.com. Topic of the Month: Thoughts, Parameters, and Considerations when Measuring. Fallout Risk ...
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