A table-funded loan, also known as a "wet funding" loan, is a type of mortgage loan where the funds for the loan are provided by a third-party lender but are disbursed to the borrower through a mortgage broker or correspondent lender. In other words, the mortgage broker or correspondent lender originates the loan with the borrower and then immediately sells the loan to the third-party lender who provided the funds.

Here's how a table-funded loan typically works:

  1. Borrower Approaches Mortgage Broker or Correspondent Lender: The borrower applies for a mortgage loan through a mortgage broker or correspondent lender. The broker or correspondent lender collects the necessary documentation, processes the loan application, and facilitates the underwriting process.

  2. Loan Approval and Closing: Once the loan is approved, the borrower goes through the closing process, where the loan documents are signed, and any required fees or closing costs are paid.

  3. Funding of the Loan: Instead of using their own funds to finance the loan, the mortgage broker or correspondent lender sells the loan to a third-party lender immediately after closing. This third-party lender provides the funds to finalize the loan.

  4. Ownership of the Loan: After the loan is funded, the third-party lender becomes the owner of the loan and assumes responsibility for servicing it, including collecting payments from the borrower.

Table-funded loans are often used in mortgage lending because they allow mortgage brokers and correspondent lenders to offer loans to borrowers without tying up their own capital. However, they have also been subject to scrutiny and regulation in some jurisdictions due to concerns about transparency and potential conflicts of interest.