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Special Reports
In this section of BrokerUniverse we examine a subject of key importance
for mortgage originators every month, based on special reports that run in our sister publication, Origination News.
Warehouse Lending
Lining Up For Lines
By Brad Finkelstein
"Parking" is mortgage industry jargon for when a lender makes a draw
on a line of credit -- the loan is parked in the warehouse.
There is also a toll for using the warehouse line (in most cases) as there is
a toll for using most public parking lots. This can take the form of usage fees or even a "haircut,"
a further example of industry jargon that is probably not familiar to people who have never gotten a warehouse
line.
Well, as the Department of Housing and Urban Development conducts its internal
debate over reform of the Real Estate Settlement and Procedures Act, and as cities, towns, counties and states
are all getting in their own versions of predatory lending laws, many mortgage brokers are exploring the option
of becoming a mortgage banker.
But, as David Fleig of Access Lending notes in a story in this Special Report,
getting a warehouse line is not for every mortgage broker. His company turns down in a normal period approximately
25% of applicants. Lately that is up to 50%.
During the height of the refinance boom there was a shortage of lending capability
by the small to midsize warehouse provider. This lead to the creation of MortgageParticipation.com, which hooks
up banks with excess funds to lend to other banks whose capacity to lend is at a limit.
Also read about how a number of warehouse providers see their business in the
coming months, as mortgage originations return to more normal level.
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