Warehouse Lending

AAA

DEFINITION of 'Warehouse Lending'

A line of credit extended by a financial institution to a loan originator to fund a mortgage that a borrower initially used to buy a property. The loan typically lasts from the time it is originated to when the loan is sold into the secondary market, whether directly or through a securitization.

INVESTOPEDIA EXPLAINS 'Warehouse Lending'

Loan originators depend on the eventual sale of a loan to repay the warehouse lender; therefore, warehouse lenders closely monitor each loan's progression with the originator toward its eventual sale. To ensure the repayment of warehouse lines of credit, warehouse lenders typically require a small charge for each transaction as well as for when the originators post collateral.

RELATED TERMS
  1. Warehouse Bond

    A type of financial protection that assures an individual or ...
  2. Warehouse Financing

    A form of inventory financing in which loans are made to manufacturers ...
  3. Mortgage Banker

    A company, individual or institution that originates mortgages. ...
  4. Secondary Mortgage Market

    The market where mortgage loans and servicing rights are bought ...
  5. Securitization

    The process through which an issuer creates a financial instrument ...
  6. Mortgage Broker

    An intermediary who brings mortgage borrowers and mortgage lenders ...
RELATED FAQS
  1. What is a tranche?

    "Tranche" is actually a French word meaning "slice" or "portion". In the world of investing, it is used to describe a security ...
Related Articles
  1. Credit & Loans

    How Mortgage Refinancing Affects Your Net Worth

    Find out how to determine whether refinancing will put you ahead or even more behind.
  2. Bonds & Fixed Income

    Profit From Mortgage Debt With MBS

    Mortgage-backed securities can offer monthly income, a fixed interest rate and even government backing.
  3. Insurance

    Behind The Scenes Of Your Mortgage

    Four major players slice and dice your mortgage in the secondary market.
  4. Economics

    What Would Happen If Interest Rates Rise?

    This time around, while U.S. long-term yields have rebounded from their January lows, rates have generally been lower than where they ended 2014.
  5. Investing

    Strategies To Position Your Bond Portfolio

    Fixed income investors may not be able to see them all right now, but important trends are stirring on the investment horizon.
  6. Savings

    How To Make Money With Airbnb: Risks & Rewards

    Airbnb lets you turn your home or spare room into extra cash. Here's how to make money and protect yourself from the risks.
  7. Mutual Funds & ETFs

    Consider This High-Yield ETF's Risks and Rewards

    Finding quality high-yield opportunities isn’t easy, but the YieldShares High Income ETF (YYY) has potential.
  8. Entrepreneurship

    Funding A Startup When Bank Loans Aren't Possible

    There are alternative ways to fund your business start-up when it is not possible to secure a bank loan, but consider the costs and risks of each option.
  9. Investing

    What are Fixed-Income Securities?

    For a fixed-income security, the periodic return on the investment is the same throughout the life of the security. Principal is returned at the time of maturity. The payment can be in the form ...
  10. Mutual Funds & ETFs

    Top Emerging Markets Dividend ETFs

    These dividend ETFs offer similar — yet different — ways to play emerging markets.

You May Also Like

Hot Definitions
  1. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  2. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  3. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  4. Law Of Supply

    A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity ...
  5. Investment Grade

    A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such ...
  6. Fringe Benefits

    A collection of various benefits provided by an employer, which are exempt from taxation as long as certain conditions are ...
Trading Center