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Sep 22 Warehouse Line Relief, but only for Big Banks
Warehouse line relief is coming in small waves, but only for the big banks, despite the fact that small and community
banks (as we have consistently been pointing out) are the most stable, have greater trust from their customers and would
benefit the most from a solution to the warehouse liquidity crisis!
Read our recent article in Mortgage Orb: “REQUIRED READING: How Independent Mortgage Bankers Can Survive The
Warehouse Crisis“
Restoring the productivity of the U.S. mortgage marketplace is a critical, perhaps linchpin, element of both domestic and
global economic recovery.Despite conditions ripe for our industry to experience resurgent and restorative volume,
independent mortgage bankers have been restrained by a massive retreat from warehouse-line lending. (More)
Despite recent lobbying efforts and legislation, changes thus far have done nothing more than bolster the big banks
whose stability has been questionable for some time. ”Big Bank” lenders saved by Troubled Asset Relief Program (TARP)
allocations are gaining market share, which poses a dangerous imbalance to our recovery and long-term financial
sustainability. From the MBA:
MBA Keeps Up Pressure on Warehouse Lending
Sorohan, Mike
More than 90 percent of warehouse lending capacity has disappeared in the past few years–an issue the Mortgage
Bankers Association has made a priority in communication with policymakers and legislators.
Last week, MBA stepped up those efforts on two fronts. On Aug. 27, MBA and the Warehouse Lending Project, a coalition
of independent mortgage bankers, met with Treasury Department officials to discuss how Fannie Mae, Freddie Mac and
Ginnie Mae could help jumpstart warehouse lending activity.
Additionally, MBA last week coordinated with 17 state mortgage lending associations in a letter to the Senate, asking for
their support in creating a solution that would open up warehouse lending channels.
The activity comes at a time when warehouse lending activity remains stagnant. Warehouse lending is a short-term
revolving line of credit provided to a mortgage company to fund mortgages from the closing table to sale in the secondary
market. It is the mechanism by which virtually all non-depository mortgage bankers fund loans that are eventually sold
into the secondary market to Fannie Mae, Freddie Mac and Ginnie Mae. Today, loans originated through warehouse
lines are responsible for at least 25 percent and as much as 40 percent of all residential mortgages, including more than
half of all Federal Housing Administration loans.
MBA estimates that the number of active warehouse lenders declined from a peak of more than 115 in 2005, to fewer
than 30 today?The total aggregate capacity of warehouse lending credit has declined to about $25 billion, down nearly
90 percent from the level reported in 2007. (more)
Here is more recent mortgage industry news concerning warehouse line lending which outlines the problems for smaller
banks:
NATIONAL MORTGAGE NEWS: September 21, 2009Warehouse Squeeze Eases—but Only for Bigger Players
Banks are becoming somewhat more willing to provide warehouse lines to larger and medium-sized players, but it remains
difficult to say when and if lines will be again be available for “mom and pop” mortgage brokers and other small
originators that are among those hardest-pressed by regulation and the downturn.
For relatively small players, the warehouse lending situation has “gotten worse, not better,” according to Scott Stern,
CEO of Lenders One, St. Louis, a cooperative aimed at giving its members the collective scale they need to compete in
the market effectively.
As a result of this situation, brokers’ and smaller players’ main career alternatives on the origination side of the business
in the near term may continue to be either collectives that aim to preserve their autonomy while supporting and sharing in
the profits from their efforts (sometimes referred to as “branching” operations) or joining a lender’s staff.
Warehouse line availability today is “driven by net worth and line size,” Mr Stern said. “Unless you need a $100 million line
and have a $10 million net worth, [warehouse lines] are getting harder and harder to find.” (more)
Small banks fail in big numbers
Left behind in finance revival
The Washington Times
By Patrice Hill
While attention has focused on the improving fortunes of the nation’s largest banks and Wall Street firms, an increasing
number of smaller banks have succumbed each week to a slow tidal wave of defaults on consumer and business loans.
(more)
Warehouse line relief is coming in small waves, but only for the big banks, despite the fact that small and community
banks (as we have consistently been pointing out) are the most stable, have greater trust from their customers and would
benefit the most from a solution to the warehouse liquidity crisis!
Read our recent article in Mortgage Orb: “REQUIRED READING: How Independent Mortgage Bankers Can Survive The
Warehouse Crisis“
Restoring the productivity of the U.S. mortgage marketplace is a critical, perhaps linchpin, element of both domestic and
global economic recovery.Despite conditions ripe for our industry to experience resurgent and restorative volume,
independent mortgage bankers have been restrained by a massive retreat from warehouse-line lending. (More)
Despite recent lobbying efforts and legislation, changes thus far have done nothing more than bolster the big banks
whose stability has been questionable for some time. ”Big Bank” lenders saved by Troubled Asset Relief Program (TARP)
allocations are gaining market share, which poses a dangerous imbalance to our recovery and long-term financial
sustainability. From the MBA:
MBA Keeps Up Pressure on Warehouse Lending
Sorohan, Mike
More than 90 percent of warehouse lending capacity has disappeared in the past few years–an issue the Mortgage
Bankers Association has made a priority in communication with policymakers and legislators.
Last week, MBA stepped up those efforts on two fronts. On Aug. 27, MBA and the Warehouse Lending Project, a coalition
of independent mortgage bankers, met with Treasury Department officials to discuss how Fannie Mae, Freddie Mac and
Ginnie Mae could help jumpstart warehouse lending activity.
Additionally, MBA last week coordinated with 17 state mortgage lending associations in a letter to the Senate, asking for
their support in creating a solution that would open up warehouse lending channels.
The activity comes at a time when warehouse lending activity remains stagnant. Warehouse lending is a short-term
revolving line of credit provided to a mortgage company to fund mortgages from the closing table to sale in the secondary
market. It is the mechanism by which virtually all non-depository mortgage bankers fund loans that are eventually sold
into the secondary market to Fannie Mae, Freddie Mac and Ginnie Mae. Today, loans originated through warehouse
lines are responsible for at least 25 percent and as much as 40 percent of all residential mortgages, including more than
half of all Federal Housing Administration loans.
MBA estimates that the number of active warehouse lenders declined from a peak of more than 115 in 2005, to fewer
than 30 today?The total aggregate capacity of warehouse lending credit has declined to about $25 billion, down nearly
90 percent from the level reported in 2007. (more)
Here is more recent mortgage industry news concerning warehouse line lending which outlines the problems for smaller
banks:
NATIONAL MORTGAGE NEWS: September 21, 2009Warehouse Squeeze Eases—but Only for Bigger Players
Banks are becoming somewhat more willing to provide warehouse lines to larger and medium-sized players, but it remains
difficult to say when and if lines will be again be available for “mom and pop” mortgage brokers and other small
originators that are among those hardest-pressed by regulation and the downturn.
For relatively small players, the warehouse lending situation has “gotten worse, not better,” according to Scott Stern,
CEO of Lenders One, St. Louis, a cooperative aimed at giving its members the collective scale they need to compete in
the market effectively.
As a result of this situation, brokers’ and smaller players’ main career alternatives on the origination side of the business
in the near term may continue to be either collectives that aim to preserve their autonomy while supporting and sharing in
the profits from their efforts (sometimes referred to as “branching” operations) or joining a lender’s staff.
Warehouse line availability today is “driven by net worth and line size,” Mr Stern said. “Unless you need a $100 million line
and have a $10 million net worth, [warehouse lines] are getting harder and harder to find.” (more)
Small banks fail in big numbers
Left behind in finance revival
The Washington Times
By Patrice Hill
While attention has focused on the improving fortunes of the nation’s largest banks and Wall Street firms, an increasing
number of smaller banks have succumbed each week to a slow tidal wave of defaults on consumer and business loans.
(more)
