The Mortgage Warehouse Lending department is essentially a $50MM line of credit extended to Capital City Home Loans LLC (CCHL), the Atlanta-based residential mortgage loan origination company in which Capital City Bank (CCB) owns a 51% interest. To be clear, Mortgage Warehouse Lending is a standalone department within CCB, and its only client is CCHL.

As a residential mortgage loan originator, CCHL accepts mortgage loan applications from borrowers (who may or may not be CCB clients) and handles all of the credit underwriting and analysis in determining whether to make the mortgage loan. 

In short, CCB does not deal directly with the borrower/homeowner. Rather, CCB’s relationship is with CCHL, whereby CCB lends money to CCHL who, in turn, uses the money to make the mortgage loan to the individual borrower. After closing, CCHL finds an institutional investor to buy the mortgage loan; when it is sold, CCHL uses the proceeds to pay back the advance on the Warehouse line of credit.

In detail, when CCHL approves a mortgage loan, they upload to the Warehouse Lending System (WLS) copies of various documents related to the mortgage loan approval, as well as information about the title agent (usually a law firm) who will be closing the loan. This information includes the name and contact info of the title agent, as well as their wiring instructions. 

Warehouse personnel then verify that the information in the uploaded documents matches the information contained in the WLS. They also contact the closing agent to confirm the accuracy of the wiring instructions. On the scheduled date, Warehouse personnel draw on the line and send a wire to the closing agent to consummate the closing. CCHL then finds an institutional investor to buy the mortgage loan, with the sale proceeds used to repay the draw on the line.

The Mortgage Lending Warehouse department does not deal directly with mortgage loan borrowers/homeowners, nor do they make any credit decisions related to whether CCHL will make the mortgage. The Warehouse is simply a line of credit that CCB extends to CCHL, who uses the funds drawn on the line of credit to close the mortgage loan. Following the closing of the mortgage loan, when the loan is sold to an institutional investor, CCHL uses the sale proceeds to pay back the draw on the Warehouse line of credit.