Fallout Risk

AAA

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.

INVESTOPEDIA EXPLAINS '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. Mortgage Pipeline

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

    The market where mortgage loans and servicing rights are bought ...
  4. Primary Mortgage Market

    The market where borrowers and mortgage originators come together ...
  5. Mortgage Originator

    An institution or individual that works with a borrower to complete ...
  6. Forbearance

    A temporary postponement of mortgage payments.
Related Articles
  1. Profit From Mortgage Debt With MBS
    Bonds & Fixed Income

    Profit From Mortgage Debt With MBS

  2. Behind The Scenes Of Your Mortgage
    Insurance

    Behind The Scenes Of Your Mortgage

  3. Make A Risk-Based Mortgage Decision
    Options & Futures

    Make A Risk-Based Mortgage Decision

  4. Mortgage Basics
    Credit & Loans

    Mortgage Basics

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center