DEFINITION of 'Mandatory Mortgage Lock'

The sale of a mortgage in the secondary mortgage market with terms that require the seller of the mortgage to make delivery to the buyer by a certain date or pair-out of the trade. The requirement to make delivery of the mortgage or pair-out of the trade makes a mandatory mortgage lock different from a best-efforts mortgage lock. A mandatory mortgage lock also carries more risk for the seller of the mortgage.

BREAKING DOWN 'Mandatory Mortgage Lock'

Mandatory mortgage locks or trades generally command a higher price in the secondary mortgage market than best-efforts locks. This is because there are fewer hedge costs associated with mandatory mortgage locks.

RELATED TERMS
  1. Best Efforts Mortgage Lock

    When the sale of a mortgage in the secondary mortgage market ...
  2. Mortgage Pipeline

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

    A type of subordinate mortgage made while an original mortgage ...
  4. Primary Mortgage Market

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

    A mortgage originator is an institution or individual that works ...
  6. Junior Mortgage

    A mortgage that is subordinate to a first or prior (senior) mortgage. ...
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