Question

A mortgage company makes a number of loans to be assembled into one package and sold to permanent investors. This process is an example of interim financing to the mortgage company and is called:__________.1. Discounting2. Blanket financing3. Warehousing4. Package financing

Answer 1

Answer: Option 3. Warehousing

Explanation: Warehousing can simply be defined as a situation whereby banks and other lenders make mortgage loans to consumers for the purpose of quickly selling those loans on the secondary market and furthermore, "warehousing" happens when individual loans are bundled, often with a common element such as the size of the mortgage or credit worthiness of the borrowers, and sold as a single unit.