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.