One of our members has been hit with a RESPA violation in connection with a correspondent program in which they agree to sell mortgages to specific investors on a "best efforts" basis. The bank uses its own funds and may decline to sell after closing, the investor may refuse to buy the loan,etc. Sometimes the bank holds these loans for a month or two and collects the interest. The FDIC examiner basically says this is table funding because the bank has the investor lined up right away, and it's really the investor that is funding the loan.

Has anyone run into a similar type of situation? This particular method is used by a lot of lenders in that area (Florida)and no one the bank has talked to has ever heard of this being considered table funding.

Let me see if I understand. You have the mortgage which is funded by your bank and then sold to the investor or secondary market. You may choose to get a "best effort" for the consumer, but you keep it on your books and then sell correct?

Cris, RESPA defines Table Funding in §3500.2 as:

"Table funding means a settlement at which a loan is funded by a contemporaneous advance of loan funds and an assignment of the loan to the person advancing the funds. A table-funded transaction is not a secondary market transaction (see §3500.5(b)(7))."

It does not sound like there is a contemporaneous assignment in your situtation. The fact that you have purchased a committment to deliver loans does not mean that a particular loan must be delivered, only that a $ must be delivered.