How does warehouse lending work

Any licensed mortgage banker can obtain a warehouse line of credit as long as it operates as a standalone entity and originates its own loans. Lenders typically have minimum net worth requirements for the mortgage bankers as well as the designated investor. The line of credit can be established following a simple application process and the submission of a funding request that includes loan documentation and verification that an approved investor stands ready to purchase the loan.

If the lender determines the loan meets its qualifications for collateral, the funding process can begin immediately. There are around 80 warehouse lenders, some that work in areas of specialty, such as subprime, commercial, or jumbo loans. Mortgage bankers should select a warehouse lender based on the type of mortgages they originate.

Warehouse Lines of Credit With mortgage rates still hovering near their historic lows, mortgage bankers are experiencing their highest level of business activity since before the financial crisis in You must be logged in to post a comment. Email contact gcpfund. How does warehouse lending work?

Prev Next. Leave a Reply Cancel Reply You must be logged in to post a comment. The bank profits through this process by earning points and origination fees. Warehouse lending is commercial asset-based lending. Warehouse lending is similar to accounts receivable financing for industry sectors, though the collateral is typically much more significant in the case of warehouse lending. The similarity lies in the short-term nature of the loan.

Mortgage lenders are granted a short-term, revolving credit line to close mortgage loans that are then sold to the secondary mortgage market. The housing market crash from to drastically affected warehouse lending. The mortgage market dried up as people could no longer afford to own a home. As the economy has recovered, the acquisition of mortgage loans has increased as has warehouse lending. Your Privacy Rights. To change or withdraw your consent choices for Investopedia.

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I Accept Show Purposes. Your Money. Wet funding refers to mortgage loans where the closing of the real estate loan and the fund from the warehouse lender or investor occurs simultaneously. Learn how Granite's new Warehouse Program benefits you and your clients allowing each partner the ability to offer Construction Financing.

Granite's inspectors act as the eyes and ears of the project, verifying all construction work is in place as per the plans and specifications prior to the release of funds.

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