Home Ownership by Country
Mandatory Mortgage Lock
What is ‘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.
Explaining ‘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.
Further Reading
- The effectiveness of mandatory mortgage counseling: can one dissuade borrowers from choosing risky mortgages? – www.nber.org [PDF]
- Consumer confusion in the mortgage market: Evidence of less than a perfectly transparent and competitive market – pubs.aeaweb.org [PDF]
- Peas in a pod? Comparing the US and Danish mortgage finance systems – papers.ssrn.com [PDF]
- Do financial counseling mandates improve mortgage choice and performance? Evidence from a legislative experiment – www.econstor.eu [PDF]
- Financial Education versus Costly Counseling: How to Dissuade Borrowers from Choosing Risky Mortgages? – www.aeaweb.org [PDF]
- The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle – www.sciencedirect.com [PDF]
- Out of sight, out of mind: Financial illiteracy, inattention, and sluggish mortgage refinancing – papers.ssrn.com [PDF]
- Three initiatives enhancing the mortgage market and promoting financial stability – www.degruyter.com [PDF]
- Peas in a Pod? Comparing the US and Danish Mortgage Finance Systems – www.jstor.org [PDF]
- Economic and Regulatory Developments Affecting Mortgage Related Securities – heinonline.org [PDF]
