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Cards In This Set
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Define Warehouse Lending
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Warehouse lending is a short-term revolving line of credit provided to a mortgage lender by a warehouse lender to fund the closing of mortgages from the closing table to sale in the secondary market. The line of credit is secured by the mortgage notes payable to the lender. The warehouse lender gets repaid when the lender sells the individual loans to an investor.
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What is the role of warehouse lending in mortgage banking
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When it comes to warehouse lending what is the mortgage banker's viewpoint
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The mortgage banker's primary objective in borrowing from a warehouse lender is to provide funds to finance loan production. Secondarily, the mortgage banker wants to obtain the lowest cost of funds.
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When it comes to warehouse lending what is the warehouse lender's viewpoint?
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Warehouse lenders provide funds for residential mortgage loans intended for sale to investors in the secondary market.
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Warehouse lending also provides...
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When it comes to warehouse lending what is the mortgage broker's viewpoint
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Warehouse lenders require mortgage bankers and brokers to comply with strict rules and to maintain a minimum net worth.
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Warehouse extensions of credit are typically made in one of two structures
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Explain commercial line of credit model
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The warehouse bank advances funds on a line of credit to a mortgage banking company for newly originated mortgages, with these newly originated mortgages serving as collateral for the funds advanced until the mortgages are sold or placed into mortgage-backed securities
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Explain sale/repurchase method
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The warehouse lender advances funds for the purchase of newly originated mortgages from the originating mortgage banking company. The mortgages become assets of the warehouse lender, subject to a repurchase agreement in which the warehouse lender agrees to sell the loans back to the mortgage lender within a specified time period for sale to another lender or for delivery into a mortgage pool that will back a to be issued mortgage backed security
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What is the line of credit
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The line of credit is a revolving credit account where the amount owed fluctuates according to the funds drawn and payments made to the warehouse lender. The funds currently on loan to the mortgage banker are referred to as outstandings
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Name the factors in establishing a warehouse line
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What does collateral mean
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Mortgage notes payable to the lender are assigned and delivered to the warehouse as security for the credit line
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A promissory note contains an unconditional promise to pay money to another person on demand or at a specified time and serves four principal purposes:
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What are wet settlements
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Wet settlement funds are advances of new funds to a mortgage banker for funding or purchasing mortgage loans in which the collateral package is not in possession of the collateral package is not in possession of the collateral agent or free of lien or bailment. A warehouse lender may make a portion of the line available on an unsecured basis for wet settlements
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What are 3 key features of warehouse lines
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