Reverse Price Risk

Reverse price risk

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.

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Reverse Price Risk

In mortgages, a situation in which a lender agrees to set the interest rate at the prevailing rate at the time the sale of the property closes. The lender is therefore exposed to the risk that the prevailing interest rate will fall between the time the agreement is reached at the closing of the sale. See also: Mortgage pipeline risk.