DEFINITION of 'Fallout Risk'

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 sale is not finalized, there is a risk that the transaction may not be completed. This represents a risk to the mortgage pipeline, as the loan may not be issued.

BREAKING DOWN 'Fallout Risk'

When a mortgage originator confirms the details of a loan, it expects the lending process to be completed. Arrangements are usually made to package the loan for resale in the secondary mortgage market. With fallout risk, the deal might not be completed and the loan will fall out of the mortgage pipeline.

RELATED TERMS
  1. Mortgage Fallout

    A term used to describe the percentage of loans that do not close ...
  2. Combination Loan

    1. A transaction consisting of two separate loans for the same ...
  3. Mortgage Originator

    A mortgage originator is an institution or individual that works ...
  4. Second Mortgage

    A type of subordinate mortgage made while an original mortgage ...
  5. 100% Mortgage

    A mortgage loan in which the borrower receives a loan amount ...
  6. Mortgage Rate

    The rate of interest charged on a mortgage. Mortgage rates are ...
Related Articles
  1. Investing

    Financial Institutions: Stretched Too Thin?

    Find out how to evaluate a firm's loan portfolio to determine its financial health.
  2. Investing

    Financing Basics For First-time Homebuyers

    If you're looking to get your first mortgage, there are many financing options available.
  3. Personal Finance

    Reduce Interest With An All-In-One Mortgage

    "Offset" mortgages combine a checking account, home-equity loan and mortgage into one account.
  4. Personal Finance

    The New Mortgage Business: More Than Just Loans

    Many mortgage brokers adapted to the post-subprime environment by becoming loan modification specialists.
  5. Retirement

    The Reverse Mortgage: A Retirement Tool

    Discover another way to fund your retirement without having to make payments on a loan.
  6. 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:
  7. Investing

    Who is Ruling the Jumbo Mortgage Market?

    The jumbo mortgage market appears to be booming this year, despite the few economic hurdles everyone's battling. Here's who is ruling the industry.
  8. 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.
  9. Personal Finance

    Conquering The Terms Of Your Mortgage

    Buyers with big down payments should get the best mortgage terms. Unfortunately, the equation isn't that simple.
  10. Personal Finance

    Millennials Guide: How to Pick the Right Mortgage

    Here’s help in finding the perfect, affordable loan for that home you have been dreaming about.
Trading Center