A mortgage banker holds newly originated loans on a short-term credit line until they are sold in the secondary market. This practice is called:
Correct Answer
A) Warehousing
Warehousing is the interim step between origination and sale. The banker draws on a warehouse line of credit to fund closings, holds the closed loans as collateral on that line, and pays the line down as the loans are sold to investors or agencies. The line is what lets a non-depository lender fund loans without deposits, and the loans stay in the warehouse only briefly.
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