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Finance

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  • October 17, 2023
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Reverse Price Risk

A type of mortgage-pipeline risk that arises when a lender (mortgage banker) commits to sell loans (mortgage loans) to an investor at rates prevailing at the time of application, while the note rates being set when the borrowers close the transaction.

Reverse price risk occurs when a commitment is made to sell the mortgage to an investor at a specific rate prior to committing to the borrower. In the meanwhile, any drop in rates would require that the loan be extended at an unexpected discount.


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