(Continued from a previous post here)
The warehouse lending predicament threatens a shorter-term robust economic recovery and weakens a vital marketplace. It is in the best interest of our industry and informed policy makers to pursue relief for independent mortgage bankers that have been parched for liquidity.
The recent demise of Colonial Bank further exacerbates the situation at hand. The removal of Colonial Bank represents another significant blow to warehouse line lending and independent mortgage bankers. With an estimated $4 billion in warehouse lending commitments, Colonial represented approximately 20-25% of total current warehouse lending capacity remaining in the market. Additionally, Colonial serviced some of the largest remaining “large cap” lines left in the industry. With this fall, the pool of available funds has once again become significantly smaller. The large independent mortgage bankers currently serviced by Colonial will begin competing for funds that are normally available to middle market lenders and will serve to push more small and mid size lenders out of business further constraining the market’s ability to meet volume demands and consumer’s needs.
The solution, many agree, lies in problem solving in a different way by looking to the local community. It has become commonly acknowledged wisdom that the mortgage marketplace is a local, not a national, phenomenon; thus common sense applies that mortgage lending liquidity is best resourced locally. Most IMBs are fully entrenched in their local financial services community, which provides them access to sources of funding capacity that just a few quarters past would have not been feasible, including private equity and smaller community banks.
To be continued…