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

Author: Jessica Bennet
Community Mentor
Ask Jessica
Posted on: 28th Mar, 2007 02:40pm

In the competitive market place of mortgage lending, table funding plays a key role to establish a level playing field for the small loan originators. This form of wholesale lending has been designed in response to the market conditions and the requirements of the loan originators. Table funding can indeed be beneficial for the small firms who either do not possess a warehouse credit line or whose credit line is too small to handle their loan pipelines. With the help of table funding small firms can restore their identity in the competitive local market.



Recognizing the role of mortgage brokers in the mortgage industry, table funding is offered to the mortgage brokers to originate, process and close loans in their names. Though mortgage brokers can process and select loans but at the time of settlement they transfer the loans to the lender.



Here, it is to be noted that table funding is not applicable for all the states in the country. This practice is applicable in wet states only. Wet states are those states which have Wet Settlement laws, which require the lending banks to pay out the funds within a period of time.




There are HUD laws pertaining to table funding--some of which can affect table funding adversely. 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.
Posted on: 28th Mar, 2007 02:40 pm
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
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.
Posted on: 28th Mar, 2007 03:57 pm
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
Posted on: 28th Mar, 2007 10:58 pm
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.
Posted on: 30th Mar, 2007 05:19 am
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
Posted on: 03rd Apr, 2007 06:39 pm
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.
Posted on: 04th Apr, 2007 03:27 am
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.
Posted on: 14th Apr, 2007 02:17 am
What is Wet Funding mean? state like Virginia, West Virgina, NC, Main, What happenes if you didn't sent the funds on time?
Posted on: 17th Aug, 2008 06:16 pm
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 refinance.

take care
Posted on: 20th Aug, 2008 05:23 am
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...
Posted on: 04th Sep, 2008 02:06 pm
Hi Mark,

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

good luck
Posted on: 05th Sep, 2008 06:07 am
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?
Posted on: 11th Sep, 2008 12:01 pm
A similar query has been discussed at http://www.mortgagefit.com/know-how/wetstates-funds.html . Please have a look at it.
Posted on: 12th Sep, 2008 06:26 am
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 !!!
Posted on: 25th Mar, 2010 06:54 am
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.
Posted on: 26th Mar, 2010 01:58 am
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...
Posted on: 10th Aug, 2010 02:00 am
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