Regarding risk for the initial underwriter, there are two main elements I think: - fallout risk https://www.investopedia.com/terms/f/fallout-risk.asp https://w

Regarding risk for the initial underwriter, there are two main elements I think: - fallout risk https://www.investopedia.com/terms/f/fallout-risk.asp https://www.investopedia.com/terms/f/fallout-risk.asp - pipeline risk: https://www.investopedia.com/terms/m/mortgage_pipeline.asp https://www.investopedia.com/terms/m/mortgage_pipeline.asp For the fallout risk an originator can typically model the impact on the value of a mortgage with a conservative low digit basispoint estimate (following past fallout patterns that have been observed for example), for the pipeline risk the originator may do some more exotic price modelling by deriving implied interest rate volatilities from market prices (of interest rate derivatives). Both risks are relatively speaking minimal given their short horizons and the (current) low volatility of interest rates. I am impressed with the quality of the website linked to by the author of this thread, great read!