Warehouse Lending

Warehouse lenders offer financing to other mortgage lenders so they can originate their mortgages. This type of short-term funding gives smaller lenders enough liquidity to focus on making new mortgages while selling existing mortgages on the secondary market.

Small mortgage bankers and lenders rely on warehouse lines of credit to finance operations, and they pay back the warehouse loans when the mortgages are sold, sometimes giving the warehouse lender a percentage of each loan that is eventually sold. The mortgage is used as collateral for the financing.