Warehouse Line of Credit is a line of credit provided by a financial institution to mortgage lenders to fund mortgage loans until they are sold on the secondary market.
The Warehouse Line of Credit is provided by a financial institution to mortgage lenders to fund mortgage loans until they are sold on the secondary market.
A warehouse line of credit is a short-term revolving credit facility that enables mortgage lenders to borrow funds from a bank or other financial institution to originate new mortgage loans. The funds borrowed through the warehouse line of credit are used to fund the mortgage loans during the origination process, including the time period between loan closing and eventual sale on the secondary market.
Once the mortgage loans are originated and closed, the mortgage lender can sell them to investors in the secondary market, such as government-sponsored enterprises (GSEs) like Fannie Mae or Freddie Mac, or other private investors. The proceeds from the sale of the mortgage loans are then used to pay off the warehouse line of credit.
Warehouse lines of credit are typically secured by the mortgage loans themselves and may have certain eligibility criteria and requirements set by the financial institution providing the credit facility. The terms and conditions of the warehouse line of credit, including the interest rate and repayment terms, can vary depending on the agreement between the financial institution and the mortgage lender.
Overall, warehouse lines of credit play a crucial role in the mortgage lending industry by providing short-term financing to mortgage lenders, allowing them to continue originating loans and supporting the flow of funds in the housing market until the loans are sold on the secondary market.
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