Warehouse Facility Agreement

The fall in the housing market between 2007 and 2008 significantly affected storage credits. The mortgage market dried up because people could no longer afford to own a home. As the economy recovered, the acquisition of mortgages increased, as did storage credits. Stock credits are not mortgages. A stock line of credit allows a bank to finance a loan without using its own capital. A stock line of credit is a line of credit used by mortgage bankers. This is a short-term revolving credit facility that is extended by a financial institution to a mortgage to finance mortgages. Storage credits can be distinguished between “water financing” and “dry financing.” [5] The difference depends on when the lender receives its money from the date the real estate transaction takes place. During “water financing,” the mortgage lender receives the funds at the same time as the loan closes, that is, before the credit documentation is sent to the stock lender.

“Dry financing” occurs when the stock credit provider receives credit documentation for verification before sending the funds. A stock line of credit is made available to mortgage lenders by financial institutions. Lenders depend on the eventual sale of mortgages to repay the financial institution and make a profit. This is why the financial institution that provides the inventory line of credit carefully monitors how any loan with the mortgage lender progresses until it is sold. The International Finance Corporation has set up credit storage lines around the world and developed an operating guide. [1] Storage credits are commercial loans based on assets. According to Barry Epstein, a mortgage consultant, bank supervisors generally treat stock loans as lines of credit that give them a 100% risk-weighted classification. Epstein proposes that credit listing storage lines be classified in this way, in part because the time risk is days, while the time-risk risk for mortgages is in years.

The cycle begins with the lender accepting a credit application from the real estate buyer. Then, the lender insures an investor (often a large institutional bank) to whom the loan is sold, either directly or through securitization. This decision is usually based on the interest rates issued by an institutional investor for different types of mortgages, while a lender`s choice of stock for a given loan may vary depending on the type of credit products accepted by the store provider or investors of the loan authorized by the stock lender to be on the line of credit.