Offsetting a TBA or delivery position instead of delivering the expected mortgage security.
A TBA pair-off is the offsetting of a TBA or delivery position instead of delivering the expected mortgage security.
TBA pair-off matters because mortgage-market delivery plans do not always match what actually happens. Loans may fall out, close late, change terms, or fail to meet the expected delivery path. When the market position does not match deliverable production, the position may need to be offset.
It also matters because borrowers see the front-end version of this issue as lock deadlines, relocks, cancellation, or changed loan terms. The pair-off itself is not a borrower charge by default, but it helps explain why lenders manage locked pipelines carefully.
Borrowers do not usually see TBA pair-off language. It appears in lender secondary-market and pipeline management.
The term becomes practical when explaining why a lender cares whether a locked loan closes as expected and why fallout can create economic consequences behind the scenes.
| Event | Why a pair-off might be considered |
|---|---|
| Loan fallout | Expected delivery no longer exists |
| Closing delay | Timing no longer matches the market position |
| Loan change | Delivered loan may not match expected characteristics |
| Hedge adjustment | The lender needs to offset excess or mismatched exposure |
A lender expected certain locked loans to close and support a TBA delivery position. Some loans do not close. The lender may offset the related market position instead of delivering the originally expected security. That offset is a TBA pair-off.
TBA pair-off differs from TBA Settlement because settlement completes the expected trade with eligible pools, while pair-off offsets the position.
It differs from Dollar Roll because a dollar roll moves similar exposure across settlement months, while a pair-off resolves an offsetting mismatch.
It also differs from Mandatory Commitment because mandatory commitment is a delivery obligation, while pair-off is one way a mismatched or unfulfilled position may be resolved.