Introduction to Mortgage Origination Examinations Training eBook

Internal Use Only

Sensitivity to Market Risk Stress Testing: • Models – allow the manipulation of numerous variables to show cause & effect in “what if” scenarios • Results can provide a basis for determining what actions may be necessary to maintain financial security

Internal Use Only

Sensitivity to Market Risk Mitigation: • Various methods available • Decision points: • Ignore if effects are negligible • Divest assets • Address the effects • Rate swaps • Investment vehicles • Full mitigation is rare