It seems the mortgage industry is finally listening to reason. We recently suggested a common sense way to solve the liquidity crisis that would both assist the mortgage market in a much needed rebound and spend the taxpayers money in a way that will actually benefit them and provide returns down the road, unlike TARP funding, bailouts and the rest. In case you missed our previous posts on the topic, check out “Solving the Liquidity Issue“, “Creating Liquidity in the Primary Market“, and “Stimulus Package, TARP Allocation, Warehouse Line Lending.”
Basically we came out and explained how the liquidity issue could be addressed by developing a nationally subsidized warehouse line: “I PROPOSE…..that instead of giving TARP funds to individual companies that can’t be controlled or take direction, the “FEDS”, under the direction of the FHFA or some other specially created managing body, should use the money to create a nationally subsidized Warehouse Line Provider. Under this concept, Taxpayer money would cease to be spent never to be seen again by only but a few. But instead…..would immediately show a return on investment and potentially lessen the overall burden by producing revenue for the government.”
Shortly afterwards, John Courson (MBA President and CEO) testified to the House Finance Committee concerning the lack of access to Warehouse Line Lending for independent mortgage bankers. The idea is gaining traction and attention quickly. In a recent article, Inside Mortgage Finance reported this week that “Independent, non-bank home lenders who sell mortgages to Fannie Mae and Freddie Mac are looking to the GSEs for assistance in restoring liquidity to warehouse lines of credit. The mortgage banking industry and the warehouse lending sector are stepping up their lobbying efforts for action that will help improve warehouse lending capacity.”
In addition to the content we have been developing on this subject for the blog, we have also recently expanded our Warehouse Lending page on our website with more in-depth information on the workings of a solid warehouse lending operation. We are looking forward to increasing the dialogue on smart solutions to the liquidity crisis at the Legislative Conference in Washington in a couple of months, and will keep covering this topic as it develops. I hope that this common sense approach gets the attention and traction it needs to actually be put into effect.
