The warehouse liquidity crisis is expanding and, according to this week’s story in MBA Newslink, starting to affect the broker to banker transition:
The mortgage industry faces a paradigm shift as warehouse lending dries up, wholesalers shut down and mortgage brokers turn into branches.
“This is an industry-wide problem,” said David Zugheri, co-founder of Envoy Mortgage, Houston. “Warehouse lending is down 90 percent by a number of participants, and the total amount of funding by 75 percent.”
Zugheri said a mortgage banker, once able to receive a $20 million line of capital with $1 million will likely receive nothing now with $5 million.
“We see that [problem] causing a lot of consolidation,” Zugheri said. “The bigger companies will get bigger, and the logical step for the smaller company will be to merge up into one that might make it.”
“We’re definitely seeing the move of branches to larger companies,” said Brian Lynch, president of Advantage Systems, Irvine, Calif. “The old deal of [mortgage] brokers becoming bankers–that is not happening because of this warehouse issue.”
Read the full article here. We have also explained how the warehouse liquidity crisis has affected this process on our website:
“Transitioning from “broker to banker” has always had an allure for those prepared to contend with added responsibilities, risks, and resource requirements. Tightening restrictions on brokers’ eligibility for opportunities to earn a profit and the massive exit of viable wholesale investors from the market has created an environment in which the move from “broker to banker” has become increasingly more attractive and possibly a necessity rather than a choice.”
Read more about the broker to banker transition and the nest steps for mortgage brokers in this economy, visit http://titanlenderscorp.com. Our warehouse lending solutions are keeping us busy with inquiries, but we promise more updates coming soon!
