Mortgage Industry News

Warehouse Lenders – Active TAKING APPLICATIONS:

• COMERICA - minimum net worth of $5MM.  Very selective with little pull through.
• FIRST TENNESSEE- minimum net worth of $500K.  Very selective with little pull through.
• TIER ONE – relatively unknown.  No website.
• USBANK - Doesn’t advertise lines. Only goes for the “big” players with heavy delivery to USBANK
• GATEWAY BANK - Training Line with multiple investors
• FIRST FUNDING - Training Line with conduit directly into Flagstar
• WACHOVIA/WELLS FARGO - Just started taking applications.  Tentatively may become a larger provider.
• VIEW POINT - minimum net worth of $1M. 

CAPTIVE LINES:  Require a specific delivery percentage to their correspondent division.

• GMAC
• COUNTRYWIDE
• FLAGSTAR

NOT TAKING APPLICATIONS

• Natty Mac
• Colonial Bank - critical to the survival of Franklin American and Taylor Bean and Whitaker
• Texas Capital Bank
• Southwest Securities
• Town North Bank - very small player
• First Star Bank - small player out of TX

ADDITIONAL NOTES: Two more lines have emerged just in the last week.  Silvergate out of CA, which is focused on CA only for now, and ResCap. 

ResCap Expanding Warehouse & Jumbo, Bank deposit growth fueling expansion, April 17, 2009 (By MortgageDaily.com staff)

“Residential Capital LLC‘s warehouse unit has hired a new chief to oversee an expansion of the business. In addition, the lender plans to step up its jumbo offerings. A healthy pace of bank deposit growth will fund much of the expansion. 

“Two weeks ago, Adam Glassner was hired to run ResCap’s warehouse operations, Jeannine Bruin, a spokeswoman for parent GMAC Financial Services, told MortgageDaily.com in an interview today.

“Adam Glassner was brought on board because he has considerable professional experience in warehouse lending,” Bruin said. “He was brought on to lead our warehouse lending team, to expand that team and to oversee the expansion of volume.”

“The spokeswoman explained that demand for warehouse financing has increased as the number of players has diminished, creating “a really good opportunity.” In addition, the expansion supports the Obama administration’s policy of making mortgage credit available.”

Update from the MBA Secondary Conference:

25 billion in warehouse line capacity currently available to independent mtg bankers.

2.7 trillion in originations expected this year with 40% of conventional product and 60% of govt product being originated by correspondents.

We’ve spoken with several lenders who are actively renegotiating renewal of their line and the renewal terms are note rate plus 300 bps with a penalty of 50 bps for every dollar not utilized at least once within a 30 day timeframe up to the line limit.

Nonrefundable application fees in the amt of $1500 is currently the norm, but some lines have recently increased it to $5000 and correspondents are paying in the hope of getting a line.

Looks like there will be no hope of GSE intervention on this front any time soon.

Ruth Lee

Efficiency, Relevant Regulation, Cost Mitigation, Investor Confidence: A Vision for Rehabilitating the Housing Industry

Despite the valuable attention being paid to toxic assets and foreclosures, there is a greater issue threatening the long term health of the financial services industry – the loss of investor confidence. As banks struggle for capital on Wall Street, we have an opportunity to lay the foundation for the return of investor confidence using readily available technology to open up the mortgage process, provide inherent accountability and complete transparency.

Cerberyx/Titan Process Management – Quality production does not require any further technology development or intricate training challenges, rather a return to sound business practices leveraging existing technology. Currently, there is little true transparency in loan origination and much of the operational standards are developed at the investor (or secondary) level leading to inconsistency and a lack of sound metrics to establish product reliability and performance across entire channels. Once the loan is closed and funded, it isn’t about addressing the source rather the consequences of inaction during origination. We must develop a regulatory structure for operations that is relevant, cost effective and efficient. Titan has designed a salient operational structure that doesn’t respond solely to origination (volume) but to investor needs and requirements for future investment, using accountability and transparency rather than “gaming” due diligence.

Democratization of Technology: Technologically, the industry is actually very advanced on a granular level. However, the lack of overall industry standardization eliminates the participation of most independent mortgage brokers without access to enterprise class software. Origination has proven to be the “tip of the spear” in loan performance and without buy-in and participation from all origination channels there is little hope for evolving the industry to meet current needs. Two short examples:

• Bar coding documents – a simple, nominal cost solution to parsing the significant paperwork in mortgage lending with lenders, regulators, GSEs and servicers. The technology is available throughout the industry, but with no standardization it is useless to the primary market where it needs to be employed.
• E-vaulting – The industry needs a credible, secure custodial electronic “vault” for warehousing digital mortgage notes to ever evolve digital viability in mortgage lending. Eliminating transportation, custodial fees and costs, lost notes, paring turn times from funding to purchase on the secondary, allowing participation from investors to servicers to local recording offices.

Titan is concerned that attention is only being paid to Wall Street/ mega-lender concerns and consideration of operational best practices is once again being left as a “what can I get away with” value proposition. As an industry, we have never seen a better time to redefine and clarify the operational role in producing investor confidence. With the GSEs under conservatorship, there is a timely opportunity for taking the lead in establishing industry operational (not only product) guidelines, disseminating efficiency through technology and culling out irrelevant regulatory protocols.

If we are going to redefine an entire industry, Titan implores that attention is not only paid to “predators,” almost all of which are out of business, but to the core issue of investor confidence through sound production.

This presentation explains warehouse lending, problems with previous warehouse lending methods, and Titan’s approach to the warehouse line lending process:  

Titan Lenders Corp president Mary Kladde spoke in depth with National Mortgage News this month about the need for a national warehouse lending solution, how this warehouse line could be structured, and Titan’s new programs designed to address this need for regional banks, community banks and credit unions. Thanks to Brad Finkelstein for a fantastic explanantion of this critical issue:

“The founder of Titan Lenders Corp., after recently lamenting about the lack of warehouse capacity, has sprung into action to help create a solution to the problem. 

“Mary Kladde, president of Titan Lenders Corp, has been outspoken in the need for an increase in the availability of warehouse funds, even going as far as calling for the government to use Troubled Asset Rescue Program money for this purpose.

“Now, Titan has launched a warehouse lending operations service platform to facilitate community bank and credit union entry into warehouse lending. The platform helps regulated institutions sustain a prudent level of due dilligence, compliance and profitability when offering bridge financing required by non-depository mortgage bankers.

“Since she first went public with her call for the use of TARP funds to serve as interim funding for mortgage loans, a few community banks, which have the capital to lend and the relationships with local mortgage bankers but lack the expertise to execute a warehouse lending program, have contacted Titan, she said. Mortgage bankers have started to turn to their local banks because they are seeking warehouse providers as their old sources are exiting the business.”

Read more about Titan’s warehouse lending platform here.  John Courson also ran a piece in the Washington Times this week focusing on the crisis:

“With so much attention focused on the housing market these days, it is surprising that an extremely critical, yet not well publicized, link in the mortgage-lending chain is in danger of becoming permanently broken.

“Warehouse lending, which provides short-term funding to mortgage banks so they can originate mortgages and sell them in the secondary market, is headed toward extinction.

“The situation has already reached the point where many of the “once-in-a-generation” refinance and purchase opportunities touted in the media are not attainable by many consumers due to the fact that lenders face a cash crunch caused by the loss of warehouse credit lines.”