This week I thought I’d offer up these simple illustrations to help clarify these two terms that so often have us scratching our heads:
“Table-funding mortgage loan” means a residential mortgage loan transaction in which the residential mortgage loan
is initially payable to the mortgage broker, the mortgage broker
does not use the mortgage broker’s own funds to fund the transaction, and, by the terms of the mortgage or other agreement,
the mortgage is simultaneously assigned to another person.
So, a table-funding agreement is one in which a person agrees to fund mortgage loans to be made in another person’s name and to then purchase the loans after they are made.
“Warehouse-lending mortgage loan” means a residential mortgage loan transaction in which the residential mortgage loan
is initially payable to the mortgage broker, the mortgage broker
uses the mortgage broker’s own funds to fund the transaction, and
the mortgage is sold or assigned before the mortgage broker receives a scheduled payment on the residential mortgage loan.
A
warehouse agreement, then, is an agreement to provide credit to a person so it can make residential mortgage loans and hold the loans pending sale to another person.
As a side note, a “
mortgage correspondent lender” is a person in the business of making residential mortgage loans in its own name, which:
• it holds for no longer than 90 days; and
• are funded by another person through a warehouse, table-funding or similar agreement.
Now print this and KISS for future reference… (Keep It Somewhere Safe!)