Posted by L.A.NSA on 3/26/05 6:17pm
Msg #27831

Funding Companies: Who are they?

Without the funding company the loan doesn't close? Who are these funding companies?
Are they anything like SS companies who can suddenly disappear? Where do the funding companies get the funds? Curious.

Reply by John_NorCal on 3/26/05 10:21pm
Msg #27870

Kind of hard for a funding company to just disappear. Usually they are an entity like a mortgage banker. They will package the loan, collateralize a few packages then sell them all on the secondary market, to FannieMae (FNMA) or FreddieMac (FHLC).

Reply by L.A.NSA on 3/26/05 10:31pm
Msg #27871

Re: Funding Companies: Who are they?...further...

Ty for your explanation, John_NorCal, but what are the backgrounds of these funders? Are they Brokers? Must they have licenses? Still curious

Reply by PAW_Fl on 3/26/05 10:34pm
Msg #27873

Many "funding" companies are either brokers or correspondent lenders, not servicing lenders or financial institutions (bankers). As a correspondent lender, that act like brokers to broker the loan to a financial institution, but they have their own cash to fund the loan until they resell it on the secondary market. Unlike brokers who have to sell the loan first, then mark it up to make their profit.

Are there "fly-by-night" companies out there? You bet. But I suggest there aren't too many that would just up and disappear.

To become a correspondent lender, you have to have capital to start with. Then you build on that by wisely selling the note to a servicing lender making some profit. Hopefully enough profit to meet the expenses and have some left over to put in the kitty to be able to fund another loan. (And eventually, provide a return on the investors capital investment.)

Reply by L.A.NSA on 3/27/05 4:06pm
Msg #27937

Re: Funding Companies: Who are they?Thank You, PAW n/m