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Titan Lenders Corp. has been founded on the principle that mortgage lenders should
aggressively focus on their front-end profit generator – origination, rather than attempt Our outsource fulfillment and mortgage consulting services include: We won’t sacrifice Quality for Volume - EVER. Contact us to learn more |
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Domestic Outsourcing for the Mortgage Industry
Warehouse Lenders and Warehouse Line Lending |
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Warehouse Line Lending Warehouse lines of credit are short‐term lines of credit secured by real estate collateral allowing mortgage bankers to fund loans (in their own name) at closing. The Warehouse Lender establishes a revolving purchase agreement with the mortgage banker that funds the loans at closing and extends interim financing for 15-30 days until the loan is purchased by the final investor. After closing, the loans are shipped to the final investor for review and purchase. When the final investor purchases the loan, the final purchase price nets out escrows, fees and Service Release Premium. The final purchase amount is sent to the warehouse lender to cover the initial funding amount. The Warehouse Lender then reconciles the cost of funds (the interest and fees they charge the mortgage banker for the short term use of said funds) vis a vis the purchase advice and credits the net amount earned to the mortgage banker. Risk Mitigation Product Risk: A primary reason behind the collapse of the major warehouse lenders over the past two years have been the “toxic” loans with their contingent repurchase demands from low performance, early payment default and fraud. Most of their major lending partners were entirely built on these loans… and when the collapse began went out of business leaving the warehouse lenders with little orno recourse for recovery. Today, the mortgage market is characterized by very limited product offerings of the most traditional and conservative varieties. Most loans are either Agency or Government, and even these have seen dramatically enhanced underwriting standards. For the warehouse lender, the lack of competition has created a market climate that is risk averse, which definitely works in their favor. Titan manages warehouse lending for only the most risk adverse loans – Agency, Government and Rural/Bond loans. While we have participated in hard money operations, we will not manage the warehouse lending aspect of such loans. Takeout Risk: Warehouse lenders, once permissive of aging loans, can no longer afford the risk of loans not purchased in a timely manner. Takeout risk can be managed in this market through due diligence with regards to compliance, fraud and quality loan production. Titan often requires its correspondent partners to employ our closing and post‐closing services to mitigate takeout loss, ensure swift salability and leverage Titan’s reps and warrants.
Fraud: There is no way to entirely insulate against fraud. However, several requirements, including the financials of the originating lender, help to mitigate losses associated with fraud. Titan manages the process flow required by the warehouse lending institution to ensure that every opportunity to mitigate fraud is optimized.
Experience: Titan offers a broad knowledge of the mortgage market, from escrow states to attorney states to wet funding states. This provides a unique opportunity for the warehouse lender to capitalizeon the safest market opportunities without requiring regional operations to manage the complexity of the market. Titan’s foundation of delivering safe, quality, compliant loans to the secondary provides a unique warehouse lending experience for the originator, allowing common sense flexibility to be weighed against the known risks and hazards of a changing market. Projections For a full financial review, please request customized Pro Forma excel modified spreadsheets. In general, warehouse lenders traditionally earn approximately 250‐375 basis points on their money. Using an outsourced option for their operations, capital requirements for overhead, technology and personnel are very limited. Titan offers a variable cost option of per unit fees to be netted out of disbursement to the correspondent lender. As a direct per file cost to the lender of $125‐155 per unit – depending on volume, the lender and the warehouse lender are able to scale their business model based on opportunity rather than capital requirements.  Why Titan? Titan provides a wide variety of operational expertise for both the primary and secondary mortgage market. As such, we have a very unique perspective on the requirements of investors to purchase loans, how to forestall salability issues, clarify process and procedures necessary to avoid repurchase, fraud and errors in production effecting salability and take corrective measures quickly and efficiently should the worst case scenario happen. We understand the needs of the warehouse lender, the originator, the investor and the regulator. Titan has not worked with a single stand‐alone warehouse lender that operates under these specific parameters – with the breadth of experience to understand both the primary and secondary markets. With a variable cost model and embedded technology, banks, credit unions or securities firms can enter the market without huge investment in infrastructure. They can also pilot programs on a smaller scale, taking their capital to market in a very structured, process driven environment. When these processes are refined and perfected, our clients can scale up, down, regionally, nationally, conforming or niche. View our warehouse lending and data security technologies:
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