DEFINITION of 'Best Efforts Mortgage Lock'

When the sale of a mortgage in the secondary mortgage market requires that the seller, usually a mortgage originator, make a "best efforts" attempt to deliver the mortgage to the buyer. This type of trade exists to transfer the risk that a loan will not close from the originator to the secondary market.

BREAKING DOWN 'Best Efforts Mortgage Lock'

Mortgage originators who hedge their own mortgage pipelines and assume fallout risk usually sell their mortgages into the secondary mortgage market through mandatory or assignment of trade transactions, both of which generally command better pricing than best efforts locks or trades because hedge risks are not transferred to the buyer.

RELATED TERMS
  1. Mortgage Originator

    A mortgage originator is an institution or individual that works ...
  2. Mortgage Pipeline

    Mortgage loans that have been locked in with a mortgage originator ...
  3. Primary Mortgage Market

    The market where borrowers and mortgage originators come together ...
  4. Second Mortgage

    A type of subordinate mortgage made while an original mortgage ...
  5. Mortgage Banker

    A company, individual or institution that originates mortgages. ...
  6. Third-Party Mortgage Originator

    1. A person or company involved in the process of marketing mortgages ...
Related Articles
  1. Personal Finance

    Behind the Scenes of Your Mortgage

    Four major players slice and dice your mortgage in the secondary market.
  2. Personal Finance

    Shopping for a Mortgage in 2017? Use This Tool First

    As home-buying technology has progressed, the process of finding the best mortgages rates for 2017 can all be done online.
  3. Personal Finance

    Finding the Best Mortgage Rates in 2017

    As home-buying technology has progressed, the process of finding the best mortgages rates can all be done online. Here's how:
  4. Insights

    How Interest Rates Affect the Housing Market

    Understand how rate changes can affect home prices and learn how you can keep up.
  5. Personal Finance

    Mortgage Company

    A company engaged in the business of originating and/or funding mortgages for residential or commercial property.
  6. Personal Finance

    5 Things You Shouldn't Tell Your Mortgage Broker

    Applying for a mortgage can be a strenuous process. Here are five things to avoid doing when meeting with your mortgage broker.
  7. Investing

    Today's Current Mortgage Rates: May 25, 2017

    Find the current day's mortgage rates offered by Investopedia Partners and learn more about what may impact rates in the upcoming weeks.
  8. Personal Finance

    5 Reasons To Save For A Big Mortgage Down Payment

    You may be anxious to buy a home, but taking time to save a large down payment has numerous advantages.
  9. Personal Finance

    Score a Cheap Mortgage, Here’s How

    Hidden costs can create what looks like a good deal. Find out how to find the best mortgage possible.
RELATED FAQS
  1. What is an assumable mortgage?

    The purchase of a home is a very expensive undertaking and usually requires some form of financing to make the purchase possible. ... Read Answer >>
  2. If My Mortgage Lender Goes Bankrupt, Do I Still Have to Pay My Mortgage?

    Yes, if your mortgage lender goes bankrupt you do still need to pay your mortgage obligation. Here's what usually happens ... Read Answer >>
Trading Center