GATEWAY IS DOWN BUT BY NO MEANS OUT – Understanding the internal crisis for warehouse lenders
Ruth Lee
Quite often I have discussions with IMBs that are bewildered by the market for warehouse lending. While profitable and low risk, they are astonished by the “shoulder shrug” the industry has given to warehouse capacity. As I have mentioned on many occasions, survival in this market will not be by accident.
“Why can’t the current warehouse lenders just give me a larger line? Why are they reducing my line commitment while increasing my approval requirements?”
Gateway is a prime example of the stresses that mortgage bankers are under.Gateway received a Cease and Desist order from the OTS addressing their need to maintain sufficient capital to support their current business channels and requiring a review of their “business plan.” That doesn’t mean that Gateway is going away, but it does highlight that our warehouse lenders are under significant pressure to restrain growth. While I wouldn’t be holding out grand hopes of quick approvals, with a $10K application fee, Gateway has an upfront reality check – literally.