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Reverse price risk

Definition:

A type of mortgage pipeline risk that occurs when a lender commits to sell loans to an investor at rates prevailing at the time of mortgage application but sets the note rates when the borrowers closes. The lender is thus exposed to the risk of falling rates.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Imbalance of orders

Used for listed equity securities. Too many market orders of one kind - to buy or to sell or limit orders to buy up or sell down, without matching orders of the opposite kind. An imbalance usually... Read More

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