 Sam
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Joined: 21 May 2005
Posts: 281
Location: CALIFORNIA
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 Posted: Thu Apr 15, 2004 12:40 am Post subject: Warehousing |
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Warehousing is a specialized form of lending which commercial banks and financial institutions provide to mortgage banking companies or mortgage brokers. These companies or brokers have actually originated the mortgages.
Example: John takes a mortgage loan which is closed with ABC finance company. But another company, XYZ Ltd provides the funds for the loan. XYZ Ltd acts as the warehousing company.
Small and medium sized banks aim towards making money by charging high origination fees and selling the loan to an investor. The process of buying a loan from the originator at the time of loan closing is known as table buying or table financing.
The process of warehousing involves the simple steps given below.
- A mortgage broker closes the loan.
- Mortgage banking company buys the loan when the closing occurs.
- The mortgage company receives funds from the bank.
- The investor company buys the loan as a part of a pool of mortgage loans sold by the mortgage banking company.
- Individual or corporate investor purchases bonds sold off by investor companies in the secondary market.
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