The Demise of Warehouse Lenders Creates Opportunity for Local Financial Institutions
Community financial institutions can build profitability and accelerate local economic recovery by adding mortgage warehouse line lending to their commercial offerings, according to US mortgage lending services outsourcing expert MetaSource Mortgage.
MetaSource Mortgage has launched a warehouse lending operations service platform to facilitate community bank and credit union entry into warehouse lending – a form of commercial lending specific to mortgage banking businesses. The platform helps regulated institutions sustain a prudent level of due diligence, compliance and profitability when offering bridge financing required by non-depository mortgage bankers.
Community and regional financial institutions are positioned to replace the warehouse lenders that have exited the industry en masse over the last 18 months, as explained by MetaSource Mortgage. According to the March 9 edition of the Mortgage Bankers Association newsletter MBA NewsLink:
"Analysts say since 2005, the number of financial institutions offering warehouse lines of credit to independent mortgage bankers declined from nearly 115 at its peak to now less than 30. Last month, JP Morgan Chase, New York, shuttered its warehouse lending business acquired through its purchase of Washington Mutual.
"Warehouse lenders add liquidity for independent mortgage bankers by allowing them to temporarily fund mortgages at the closing table rather than a slow, lengthy process of shipping loans to investors, including Fannie Mae, Freddie Mac, FHA and VA loans."
Mortgage bankers are looking to secure or replace a critical funding source at the same time financial institution revenue is being eroded by soured Wall Street investments, fraud, complicated consumer credit and auto loan risk scenarios, and an unstable commercial lending environment. According to MetaSource Mortgage, community institutions that offer warehouse lines to mortgage banks benefit by adding a significant profit center and, concurrently, by strengthening their local economy through increased access to real estate finance alternatives.
"Regional banks, community banks and credit unions could be great resources for local mortgage bankers that have lost, are in risk of losing, or need to increase the capacity of their warehouse line, at a time when purchase and refinance activity is picking up," said MetaSource Mortgage senior VP Mary Kladde. "MetaSource Mortgage's warehouse lending service platform helps community institutions better serve their mortgage bank customers and revitalize their local residential real estate economies."
Titan's warehouse lending service platform includes collateral management, line reconciliation, and technology infrastructure, providing local institutions the same operational support as any warehouse line lender. MetaSource Mortgage's service platform provides a variable cost solution to micro warehouse lending with specific focus on the needs of local banks.
About MetaSource Mortgage
MetaSource Mortgage is one of a specialized few providers of mortgage back office fulfillment services, a not-well-understood facet of mortgage lending that includes closing, funding, and post closing services. Community banks, credit unions, mortgage bankers and brokers use outsource providers strategically to minimize compliance risks in a time-sensitive error-averse environment. Fluctuations in mortgage lending volume also lead some lenders outsource their entire back office operation and secure predictable "per transaction" pricing rather than maintaining an inflexible static in house staff.