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Table funding describes a lending methodology in which loan originators make mortgages with internal capital, and hold them until they can be sold on the secondary markets.
Such finance operators are somewhere between a portfolio lender and an originator.
And these operating methods might be necessary for lenders with little capital and make small loans.
This is because the loans they make are not big enough to be sold on the secondary markets. Therefore, they need to accumulate many loans in order to package up the loan sizes for sale to investors.
This provides working capital to originate more loans.
In certain circumstances, originators might even have special relationships with lenders and operate in a just-in-time manner.
In this case, a lender takes immediate assignment of the table-funded loans after borrowers have closed the mortgage.
Profits made by originators who practice table funding have to be declared on loan closing statements.