Final answer:
A "Buy-Back" provision in table funding is a clause that mandates the loan originator to repurchase the mortgage loan from the funding party if specific conditions occur, like early payoff, default, or discovered irregularities.
Step-by-step explanation:
A "Buy-Back" provision, in the context of table funding, is a contractual clause. It obligates the originator of the mortgage loan to repurchase the loan from the investor or funding party if certain conditions are not met. Conditions triggering a buy-back can include early loan payoff, default soon after origination, or discovery of fraud or underwriting deficiencies.
Table funding is a practice where a mortgage loan is funded at the closing table by a third party, which typically is not the actual originator of the loan. Instead, the loan originator sells it to the funding party right at, or shortly after, the closing. A buy-back provision is important in such transactions because it mitigates the risk to the funding party by ensuring that the originator maintains some level of responsibility for the quality and performance of the loan.