For information on Mortgage Hedging and Secondary Marketing solutions, look here.
[hedge] A securities transaction that reduces the risk on an existing investment position.
An issue circling the mortgage industry for years now is the idea of managing risk or hedging your pipeline. It seems there are a number of interpretations as to what this is and should mean to your pipeline. One idea is to absolutely minimize your risk. Perhaps the easiest way to accomplish this in the mortgage business is to give your potential borrower the option to lock or float at their option. This assumes a couple of things:
1) Your consumer is armed with sufficient information to make an informed decisions about their mortgage
2) You don’t get caught in a rate “squeeze” or the situation where they decide to lock as the market is moving either by design (unlikely) or dumb luck.