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Pipeline

• Is a type of risk often associated with mortgages. It occurs from the time an application is accepted to the sale of the asset. Some analysts partition this process into two parts: production and inventory. Production starts at the time of the application and continues until the closing of the mortgage. Inventory risk starts at the closing and continues until the product is hedged or sold. Different hedging techniques are suggested for the two partitions.

 
 Embedded terms in definition
 Asset
Hedging
Inventory
Mortgage
Production
Risk
Sale
Time
Type
 
 Referenced Terms
 Additional hedge: A protection against borrower fallout risk in the mortgage Pipeline.

 Borrower fallout: In the mortgage Pipeline, the risk that prospective borrowers of loans committed to be closed will elect to withdraw from the contract.

 Cf/d or cfd: Refers to Cubic Feet per Day. It measures the rate of flow at gas well or Pipeline.

 Fallout risk: A type of mortgage Pipeline risk that is generally created when the terms of the loan to be originated are set at the same time as the sale terms are set. The risk is that either of the two parties, borrower or investor, fails to close and the loan falls out of the pipeline.

 Investor fallout: In the mortgage Pipeline, risk that occurs when the originator commits loan terms to the borrowers and gets commitments from investors at the time of application, or if both sets of terms are made at closing.

 
 Related Terms
 Mortgage pipeline
Mortgage pipeline risk

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