FRANKLIN BANK ACCESS LENDING DIVISION - OUR METHODOLOGY
Fiscal Management and Operations Shift in Cash Flow
As a broker, you receive any fees due on the HUD-1 from the title company, and YSP is paid either from the title company at closing, or sent to you from the wholesale investor within 3 - 5 days. As a banker, you wait for most or all of your money until the investor purchases the loan, typically 10 days to two weeks. You may receive some fee income reflected on the HUD-1 from the closing agent, but generally Access Lending Division "net funds," meaning most or all of up front fees are deducted from the funds we provide on your behalf at closing. Most of our customers prefer our net funding approach to the arbitrary "haircut" imposed by many other warehouse lenders, as it normally eliminates the possibility you will have to come out-of-pocket at closing.
Impact on Working Capital
The actual impact of the shift in cash flows associated with selling closed loans under correspondent agreements as compared to table funding by wholesale investors varies greatly depending upon how you pay your loan officers. Increased working capital will also be required if investor purchase is extended due to delays on your part in shipping the credit package, uncleared stips or just poorly documented loans. If you are making the transition from broker to banker, the Access Lending Division can help you estimate your working capital requirements.
Accounting
There are more items to account for as a banker, including per diem interest you earn on the loans until purchased by the investor, interest expense and fees paid to Franklin Bank and the gain or loss on the loan sale to the investor. The final HUD-1 and the remittance advices from both your investor and Franklin Bank should contain everything you need to know. Access Lending Division customers enjoy 24/7 online access to detailed information about each loan settlement. Keep it simple by thinking about it one loan transaction at a time, and insist that your accountants compile it for you that way.
For more information, contact an Access Lending Division Trusted Advisor.
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