Are you curious to know what is table funding? You have come to the right place as I am going to tell you everything about table funding in a very simple explanation. Without further discussion let’s begin to know what is table funding?
Table funding is a common practice in the mortgage industry where a mortgage lender or broker obtains funding for a loan from a third-party investor or financial institution. In this blog, we will explore what table funding is, how it works, and some of its key features.
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What Is Table Funding?
Table funding is a process where a mortgage lender or broker obtains funding for a loan from a third-party investor or financial institution. In table funding, the mortgage lender or broker originates the loan and takes it to the closing table, where the loan is funded by a third-party investor or financial institution. The third-party investor or financial institution then becomes the owner of the loan.
How Does Table Funding Work?
Table funding involves several steps. First, the mortgage lender or broker originates the loan and obtains approval from the borrower. Then, the lender or broker prepares the loan documents and takes them to the closing table. At the closing table, the borrower signs the loan documents, and the third-party investor or financial institution provides the funds to close the loan.
After the loan is funded, the third-party investor or financial institution becomes the owner of the loan. The mortgage lender or broker receives a fee for originating the loan, but they are not the owner of the loan. The third-party investor or financial institution then services the loan, collecting the payments and managing the loan throughout its term.
Key Features Of Table Funding
- Access To Funds: Table funding provides mortgage lenders and brokers with access to funds from third-party investors or financial institutions, allowing them to originate and close more loans.
- Reduced Risk: Table funding reduces the risk for mortgage lenders and brokers, as they are not required to use their own funds to originate and close loans.
- Simplified Process: Table funding simplifies the loan origination and funding process, as the mortgage lender or broker does not have to provide the funds for the loan.
- Compliance Requirements: Table funding requires compliance with regulations and guidelines set forth by federal and state agencies, including the Consumer Financial Protection Bureau (CFPB) and the Department of Housing and Urban Development (HUD).
Conclusion
Table funding is a process where a mortgage lender or broker obtains funding for a loan from a third-party investor or financial institution. This practice provides access to funds, reduces risk, simplifies the loan origination and funding process, and requires compliance with federal and state regulations. If you are a mortgage lender or broker, table funding may be a useful tool to help you originate and close more loans.
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FAQ
What Does Table Funding Mean In A Mortgage?
Table Funding is sometimes also referred to as Wholesaling or White Labeling. When a Broker or Correspondent does not have enough money to fund their own loan but wants to give the appearance that they are a direct lender they will usually enter into a table funding agreement with a different lender.
What Does Table Funded Mean?
(g) “Table funding” means a closing or settlement at which a mortgage loan is funded by a lender by a contemporaneous advance of mortgage loan funds and an assignment of the mortgage loan to the lender advancing the funds
Do Mortgage Brokers Always Table Funds?
Though mortgage brokers can process and select loans at the time of settlement they transfer the loans to the lender. Here, it is to be noted that table funding is not applicable to all the states in the country. This practice is applicable in wet states only.
Is Table Funding Legal In California?
The practice commonly known as “table funding” is not permitted under the California Financing Law.
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