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Special Reports
Warehouse Lending
Warehouse Volumes Steady As She Goes, But...
By Paul Muolo
With residential production volumes up slightly from the same period last
year, the warehouse market turned in a decent performance in the first half of 2006.
According to exclusive survey figures compiled by Origination News, warehouse commitment volumes at mid-year were
down slightly from year-end, $87 billion vs. $96 billion. (A handful of warehouse providers and Wall Street gestation
repo lenders would not provide figures which affected the results.)
During the first six months of the year, residential funders of all stripes, non-depositories, banks, thrifts and
credit unions, funded $1.6 trillion in home loans, a surprising 8% gain from the first six months of 2005.
At mid-year, the nation's top three warehouse providers reported either slight gains or slight declines in their
commitment volumes.
Washington Mutual, Seattle, ranked first in commitments with $15.2 billion, down 7% from year-end. GMAC-RFC, Bethesda,
Md., ranked a close second with $15 billion (down 3%), and Deutsche Bank, New York, ranked third with $13.2 billion
(up 4%).
GMAC-RFC's affiliate, GM Bank of Cherry Hill, N.J., had $2.2 billion in commitments at mid-year, ranking fifth
nationwide.
A commitment is just that, a commitment to lend a certain amount of money to a mortgage banking firm, usually a
non-depository.
The use of warehouse lines is measured in average outstandings. At June 30, GMAC-RFC had average outstandings of
$8.2 billion vs. $5.8 billion for WaMu. (Not all firms provide this data point.)
Late last year Washington Mutual surpassed GMAC-RFC as the nation's top warehouse provider, though they continue
to be fierce competitors.
Frank Hattemer, SVP of mortgage banker finance for WaMu, said his group's "primary mission is to finance the
mortgage loan originations of independent mortgage companies versus simply using warehouse financing to buy loans."
GMAC-RFC's affiliate in Minneapolis is a top purchaser of already funded nonconforming loans. GMAC-RFC officials
declined to comment for this article.
Even though both the production and warehouse markets had a strong first-half, business is expected to fall off
during the final six months of the year.
Warehouse lending is fueled by originations. As ON went to press, the housing market was in the throes of a major
correction which will affect the primary production market.
Even though WaMu, GMAC-RFC and Deutsche had a decent first-half, not all warehouse providers were as fortunate.
Chinatrust Bank USA, New York, saw its commitments fall to $107 million at mid-year, a 23% decline.
Stephanie Kopf, first vice president of Chinatrust, said line usage "is low right now," adding that "we're
getting a lot of requests for HELOCs but we don't do those."
About 80% of Chinatrust's lines are used to fund conventional and government product for small to mid-sized mortgage
bankers in New York, New Jersey and California.
Ms. Kopf said the bank is uncertain at this time whether it will stay in the warehouse business. "We're assessing
the situation," she said.
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