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Table Funding: How does it work and why is it so popular?

Hi Laura,

Welcome to Mortgagefit discussion board.

Table funding is an option which allows brokers approved for Wholesale Traditional Lending to originate, process and close loans in their name. But at the time of settlement, the loan is transferred to the lender. And the lender simultaneously advances funds for the loan. This option meets the needs of brokers who want to maintain good customer relationship by closing loans in their own name.

Do let me know if you have any other questions.

Thanks
Blue

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Table funding has grown at fast pace as more and more lenders have discovered that brokers provide an important role in the whole loan process because of their specialization as loan originators.

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helping_user's picture
helping_user | Joined: March 31, 2006 03:39 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Laura,

Table funding is applicable in wet states only. Wet states are the states having Wet Settlement laws, which is require lending banks to pay out the funds within a period of time (some how within 2 days of closing). This law is in place to reduce the practice if delaying funds after closing the documents.

Thanks

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Caron's picture
Caron | Joined: July 19, 2005 08:37 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Table funding is a process of originating loans with internal capital of a mortgage company or the lender till there is sufficient number of loans to package them for being sold into the secondary market. Sale of the package of loans allows the lender to recover the capital invested for lending.

Recent guidelines set up by the accounting industry encourage table funding. Lenders are allowed to amortize servicing-released premiums paid to originators.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

There are HUD regulations which can affect table funding; some see it as an obstacle to growth of table funding.

As per Real Estate Settlement Procedures Act disclosure regulations borrowers are to be informed about such payments to broker made as servicing released premiums which brokers are not in favor of.

Trudeau

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sara's picture
sara | Joined: July 5, 2006 03:16 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Table funding is a response to the needs and requirements of the market. By providing the funds for originators at closing, the process helps small firms which do not have the required funds for lending purposes.

What happens in table funding is: mortgage brokers may process and select loans but at the time of settlement, they transfer these loans to the lender. Most mortgage brokers take part in table funding in order to avoid disclosing lender rebates to borrowers.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Table funding is a popular practice in the mortgage industry. It involves putting the loan in the broker's name but the funds are provided by a lender to whom the loan is assigned after closing. This means, on paper the loan is considered to have been originated by a broker but the actual funds are offered by the lender or a loan company.

However, the Department of Corporations and Department of Real Estate in California have declared the practice as illegal under the laws in the Financial Code and the Business and Professions Code.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

What is Wet Funding mean? state like Virginia, West Virgina, NC, Main, What happenes if you didn't sent the funds on time?

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sara's picture
sara | Joined: July 5, 2006 03:16 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi jacquell,

Wet funding implies that as borrower signing for a mortgage deal will get the loan funds right at the closing time when he signs on the loan docs. Usually the borrower gets the funds within 3-4 days of the closing. This goes the same for purchase as well as [url=http://www.mortgagefit.com/refinance.html]refinance[/url].

Take Care

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Alex mentioned above that "the Department of Corporations and Department of Real Estate in California have declared the practice as illegal under the laws in the Financial Code and the Business and Professions Code." I believe that is correct, but relates only to residential mortgage loans. I believe table funding by licensed real estate brokers in California is permitted for commercial properties, or for multi-unit residential properties comprised of five or more units. If that understanding is incorrect, I'd like to know...

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Caron's picture
Caron | Joined: July 19, 2005 08:37 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Mark,

You're correct. Table funding in California is legal for commercial properties.

good luck

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am work in Reverse Mortgage loan, How would you explain "wet States Funds" to staff of peoples. What happenes if borrower didn't sign doc correction? What happenes if disaster notices can't funds loan on time?

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sara's picture
sara | Joined: July 5, 2006 03:16 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

A similar query has been discussed at http://www.mortgagefit.com/know-how/wetstates-funds.html . Please have a look at it.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Is table funding legal in Pennsylvania. What allows a broker to stand as grantor of loan when he/they dont have cash on hand to support claim.
Its like placing a bet and not being able to cover if you lose !!!

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Table funding is available in case of wet funding states. I don't think Pennsylvania is a wet funding state. Thus, I don't think this option is available in case of Pennsylvania.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

How are loans funded in this manner viewed when considering the custody of the DOT and the Mortgage Note? The term Lender appears to mean the source that re-packaged the loan on or into the secondary market...

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Well... I guess it's the lender who would be able to let you know how the whole process works...

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

"Well... I guess it's the lender who would be able to let you know how the whole process works..."

The whole point of "table funding" appears to bypass any sort of traditional lending and also appears to rely on a secondary pool of wholesale lenders and further tied an MBS account.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

In the State of Colorado, do the date of loan documents, the date they are signed and the date of closing all have to be the same date?

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adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest,

As far as I know, the date on loan documents and the date of closing may be different. Nevertheless, it will be better if you could show the documents to a real estate attorney and take his opinion in this matter.

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