In one sentence
A charge compensating the lender for the cost of unwinding a rate lock or funding arrangement when a loan fails to close as scheduled.
The longer version
When a borrower locks a rate and the loan slips or dies, the lender may have hedged the position, and unwinding that hedge has a cost. The breakage fee passes that cost to the party that caused the miss.
Breakage risk is one more reason closing discipline has a dollar value: a diligence delay that blows the lock window is not just annoying, it is billable.
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