Commitment Cancellation and Pair-Off

Commitment Cancellation

A Best Efforts commitment may be cancelled prior to delivering the Mortgage Loan via the Correspondent Portal. Correspondents are encouraged to cancel as soon as such action is deemed necessary.

A Bulk, AOT, or DT commitment may not be cancelled. Failure to deliver into a mandatory-delivery commitment may result in a pair-off fee.

Commitment Pair-Off

PennyMac may collect a pair-off fee for failure to deliver into a Best Efforts commitment when the subject Mortgage Loan has closed. Please refer to Commitment Options.

PennyMac may collect a pair-off fee for failure to deliver into a Bulk, AOT, or DT commitment. Please refer to Commitment Delivery Variance.

PennyMac calculates a pair-off fee in accordance with the following terms:

  • Price Differential = Current Price – (Price At Lock + Extension/Roll Fees)
  • Pair-off Fee = (Positive Price Differential + Pair-off Penalty Fee) * Under-Delivery Amount

Commitment Pair-Off Penalty Fee Table:

Type of Commitment

Product

Pair-off Penalty Fee (basis points)

Best Efforts

All

50

Assignment of Trade & Direct Trade

All

12.5

Bulk

FNMA DURP > 80 LTV

25

Conventional/FHA High Balance

25

Products Not on Rate Sheet

25

All Others

12.5

Best Efforts Commitment

Current Price is the base price on the Best Efforts rate sheet that was in effect as of the Pair-Off Date/Time for the maximum commitment term that is less than or equal to the number of calendar days remaining in the commitment being paired-off. A live price adjustment may be added to the rate sheet price to adjust for market movement since the last rate sheet posting.

Price At Lock is the base price on the Best Efforts rate sheet that was in effect as of the commitment lock date/time of the commitment for the original commitment term. A live price adjustment may be added to the rate sheet price to adjust for market movement between the rate sheet publication date/time and the lock date/time.

Note: If a Best Efforts commitment has been relocked, the Price At Lock will be the base price determined by the relock policy in effect as of the relock date/time.

Bulk Commitment

Current Price is the price PennyMac would bid on the Pair-Off Date/Time for Mortgage Loans with the same characteristics as those that were expected to be delivered and purchased by PennyMac in accordance with the Bulk commitment, but were not purchased by PennyMac regardless of reasons such loans were not purchased, with a delivery due date equivalent to the delivery due date of the commitment being paired-off.

Price At Lock is the original commitment price for the Mortgage Loans that were expected to be delivered and purchased by PennyMac in accordance with the Bulk commitment, but were not purchased by PennyMac regardless of the reasons such loans were not purchased.

Assignment of Trade and Direct Trade Commitment

Current Price is the offer-side price of the commitment’s security as of the Pair-Off Date/Time.

For Assignment of Trade commitments, Price At Lock is the trade price of the security assigned for a single trade assignment, or the weighted average trade price for the security assigned for a multiple trade assignment, as of the assignment date/time.

For Direct Trade commitments, Price At Lock is the price of the commitment’s security as of the lock date/time.

Pair-Off Date/Time

Best Efforts Commitments

The Pair-Off Date/Time is the earlier of:

  • Market open on the first business day immediately following the commitment delivery due date, or
  • First date/time the Best Efforts lock desk is open after PennyMac obtains conclusive evidence that a loan locked in a Best Efforts commitment closed and will not be delivered. Please refer to Commitment Options.


Bulk, Assignment of Trade, and Direct Trade Commitment

The Pair-Off Date/Time is the earlier of:

  • First date/time PennyMac’s Mandatory Trade Desk is open after the correspondent requests (and PennyMac acknowledges) a commitment pair-off, or
  • First date/time PennyMac’s Mandatory Trade Desk is open on the business day immediately following the commitment delivery due date.