Best Efforts Commitments
Best Efforts commitments offer a delivery variance of the lesser of plus or minus (±) ten percent (10%) or plus or minus (±) thirty-five thousand dollars ($35,000) of the original Mortgage Loan amount.
A Mortgage Loan amount change to a Mortgage Loan in a Best Efforts commitment that results in a net Mortgage Loan amount that breaches the allowed delivery variance will subject the commitment to reprice based on the following conditions and calculations:
Under-Delivery, Improving Market
Existing Final Price - [((Current Rate Sheet Date/Time Final Price – Existing Final Price) * (Commitment Amount - Delivery Variance Amount - New Loan Amount)) / New Loan Amount]
Under-Delivery, Declining Market
Existing Base Price applies to reduced Mortgage Loan amount.
Over-Delivery, Improving Market
Existing Base Price applies to existing and additional Mortgage Loan amount.
Over-Delivery, Declining Market
Existing Final Price + [((Current Rate Sheet Date/Time Final Price – Existing Final Price) * (New Loan Amount - Commitment Amount - Delivery Variance Amount)) / New Loan Amount]
Pennymac actively monitors Mortgage Loan amount changes to Best Efforts commitments. If Pennymac determines a correspondent excessively updates Mortgage Loan amounts, Pennymac may modify price based on a more punitive calculation. For example, if a correspondent delivers over the variance in a declining market, Pennymac may apply a worse-of price calculation to the entire Mortgage Loan amount, rather than just the overage.
Note: Pennymac resets the commitment delivery variance at relock.
Bulk, and Bulk AOT Commitments
Bulk, and Bulk AOT commitments offer a delivery variance of the lesser of plus or minus (±) two percent (2%) of the original commitment amount (prior to over-delivery), or one hundred thousand dollars ($100,000).
Mandatory delivery commitments with delivery stipulations offer a delivery variance of the lesser of plus or minus (±) one basis point (.01%) of the original commitment amount, or one hundred thousand dollars ($100,000).
Aggregate Mortgage Loan amount changes to Mortgage Loan(s) in a Bulk, or Bulk AOT commitment that result in a net Mortgage Loan amount that breaches the allowed delivery variance will subject the commitment to reprice based on the following conditions and calculations:
Under-Delivery Breach
An under-delivery results when the principal balance of Mortgage Loans delivered into a commitment is less than the commitment amount minus the applicable delivery variance amount, noted by the following expression when the result is a positive number:
Under-Delivery Amount = [Commitment Amount + Previously Agreed Upon Over-Delivery Amount – Delivery Variance Amount – Delivered Amount – Previous Pair-off Amount]
Failure to deliver within tolerance may result in a pair-off fee or require substitution. Please refer to Commitment Cancellation and Pair-Off and Mortgage Loan Rejection, Post Delivery Cancellation and Substitution.
Over-Delivery Breach
An over-delivery results when the principal balance of the Mortgage Loan(s) delivered into a commitment exceeds the commitment amount plus the applicable delivery variance amount, noted by the following expression when the result is a positive number:
Over-Delivery Amount = [Delivered Amount + Previous Pair-off Amount – Commitment Amount – Previous Over-Delivery Amount – Delivery Variance Amount]
Note: The delivery variance amount does not change when an over-delivery occurs.
| Type of Over-Delivery | Description |
| Over-Delivery Date/Time | First date/time PennyMac’s Mandatory Trade Desk is open after the date/time on which the Correspondent requests allowance for an over-delivery. |
| Over-Delivery, Improving Market | If the Current Price is greater than or equal to the original commitment base price prior to any accumulated roll fees, the over-delivered amount will receive the original commitment price excluding accumulated roll fees. |
| Over-Delivery, Declining Market | If the Current Price is less than the original commitment base price prior to any accumulated roll fees, the over-delivered amount will be priced to the Current Price. |
Determining Current Price
| Type of Commitment | Current Price |
| Bulk Commitment and Bulk AOT | Current Price is the price Pennymac would bid on the over-delivery date/time for Mortgage Loans with attributes equivalent to those of the over-delivered amount and with the original commitment term. |