When the Contract Rate at Closing Is Less Than the Current

Multiple Choice

When the contract rate at closing is less than the current market rate (i.e., interest rates have increased since the time of the loan commitment) , the mortgage banker will have to sell the newly originated loan at a discount. This scenario best depicts the mortgage banker's exposure to which of the following risks?

A) Interest rate risk.
B) Fallout risk.
C) Default risk.
D) Liquidity risk.