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Additional Hedge

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Additional hedge
A protection against fallout risk in the mortgage pipeline.

Additional Hedge
A way for a mortgage lender to protect itself from the risk that a potential borrower will reject a loan after the terms are set but before the deal is finalized. Such a rejection could result in a loss for the lender, particularly if it has already made arrangements to repackage and sell the mortgage to a third party. An additional hedge protects against this. See also: Fallout Risk.


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6 percent after its third-quarter profit missed expectations due to spending on additional hedges.
In fact, some would argue that actually borrowing money at fixed rates is an additional hedge, which is currently an option for performing properties through Fannie Mae, Freddie Mac and FHA.
Furthermore, if the entire marketable securities account was used to purchase the homestead titled by the husband and wife as tenants by the entirety, it would provide an additional hedge in a bankruptcy proceeding that is not filed until after the 1,215-day period.
 
 
 
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