What is ‘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.
Explaining ‘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.
Further Reading
- COVID-19, risk, fear, and fall-out – www.tandfonline.com [PDF]
- The effects of gender composition of senior management on the economic fallout – www.tandfonline.com [PDF]
- The East Asian financial crisis: fallout for private power projects – openknowledge.worldbank.org [PDF]
- Measuring the fallout risk in the mortgage pipeline – jfi.pm-research.com [PDF]
- Measuring financial risk in the 21st century – go.gale.com [PDF]
- Fallout from the global financial crisis: should capitalism be curbed? – journals.sagepub.com [PDF]
