What is ‘Take-Out Commitment’
A specific type of mortgage purchase agreement. Under a take-out commitment, a long-term investor agrees to buy a mortgage from a mortgage banker at a specific date in the future. Take-out commitments are enforced once a project reaches a particular stage where long-term, rather than short-term, financing is the preferred alternative.
Explaining ‘Take-Out Commitment’
There are a few specific types of investors that purchase take-out commitments. In most cases, these are insurance companies or other financial institutions. They are known as “take-out lenders.”
Further Reading
- Loan commitments and private firms – papers.ssrn.com [PDF]
- Why soft law dominates international finance—and not trade – academic.oup.com [PDF]
- Fee-based pricing of fixed rate bank loan commitments – www.jstor.org [PDF]
- Financial markets as a commitment device for the government – cadmus.eui.eu [PDF]
- Early Commitment Financial Aid Programs: Promises, Practices, and Policies. – eric.ed.gov [PDF]
- The economics and culture of financial inflation – journals.sagepub.com [PDF]
- Loan commitments and monetary policy∗ – www.sciencedirect.com [PDF]
- Outside equity financing – www.nber.org [PDF]