In the private lending industry, several vital terminologies are quite important for lenders to understand their concepts properly, define their terms and be aware of their usage. This is to avoid being used interchangeably or in the wrong manner. Some of these key terms are explained below:
Table Funding and Wholesale Lending
Wholesaling and White Labelling are two terms used to describe Table Funding. For example, when a Broker lacks the means to fund their loan but wants to look like a direct lender, they would typically engage in a table funding agreement with another private lender. Technically, in table funding, a different lender is named in the Deed of Trust as the original lender who supplied the funds for the loan.
This is quite different from wholesale lending, where a broker could falsely appear to be the lender, but in the real sense, the actual lender has his name on the Deed of Trust and other documents.
Here, the correspondent is an individual broker who does not have sufficient funds to provide a loan. He then uses a lender’s loan capital to provide for the loan. They indirectly serve as private lenders with the ability to perform all of the necessary in-house documentation steps.
When clients claim to be direct lenders, they usually express that they have sufficient funds to provide loans with their company’s funds. In direct lending, lenders have investors who provide funds, which they loan out to people as private lender loans.
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