The inventory of mortgages that have been closed (i.e., no more in the pipeline) and are parked for sale in the secondary market. Once a mortgage is closed and the final documents are obtained, a mortgage moves out of the pipeline and ends up in the warehouse, where it is either held for sale to potential investors (the lenders), or shipped to a prearranged buyer.
The mortgage inventory can either be committed or non-committed. A mortgage banker or firm may restrict the amount of non-committed inventory as per its applicable policies. Held for sale (HFS) loans in the warehouse are usually marked to market at a certain frequency (at least every quarter). The exercise may involve write-downs and write-ups, depending on the market situation. However, total market value on records, in the case of accumulated write-ups, may be limited to an upward boundary being the actual cost.
