“Dog lovers have no problem telling you why the dog is considered man's best friend: Loyalty, unconditional love, companionship and laughs. Any doctor can also tell you that having pets makes our lives better and makes us healthier, by convincing us to be more active. You can't argue with the fact that we become much more relaxed, lowering our blood pressure, when our loving dog or cat comes to us to say hello and asks for a gentle pet.” 

This is part of  an article written by Diane Chapman.

A mortgage banker’s best friend is his warehouse lender (s).  Without a warehouse lender, mortgage bankers can’t be a mortgage banker.  With inadequate warehouse lines, mortgage bankers can’t grow and generate earnings.   Some of the most stressful times for a CEO is when they have several million dollars in loans to fund but can't due to a maxed out warehouse line.

We believe mortgage bankers should have 1-2 warehouse lines with the major players and 1 line with a local community bank. 

Let’s discuss why this is important...

Major Warehouse Lending Players
Major warehouse funding players have built the infrastructure to support the warehouse lending business. They also can provide a handsome return to the bank.
Their staff is competent and work flow process is organized.  Most have online technology that allows for seamless transmission of collateral data.

Quarterly and annual reviews / audits help mortgage bankers become more efficient operators.  We find the better warehouse lenders prefer their customers to become better mortgage bankers, so often times look to provide valuable input on how to improve their funding process.

Long term relationships are important. 

Some warehouse lenders we like are:  Texas Capital, Flagstar Bank, Southwest Securities, and Comerica Bank.

Community Bank
Community Banks love local business relationships.  They want deposits and mortgage bankers can generate lots of deposits. 

A warehouse facility with a community bank is a great way to handle end-of-the month unscheduled loan funding issues.   It is also a great hedge if one of the major players exits the business abruptly or reduces its funding line capacity.  One major recently exited the California market, leaving a few mortgage bankers scrambling for replacement funding.

We’ve helped several community banks start a warehouse lending business.   Banks are very acquainted with commercial lending and quickly learn the “warehouse lending ropes” after a few days of education and process training.  Most of the banks we’ve helped had an existing relationship with a local mortgage banker.   

If a bank is not comfortable handling the collateral but wants to provide a credit line to its local mortgage banker customer, they can consider participating in a line facility with one of the major warehouse lenders.  The local bank provides the funds to its customer under a loan participation agreement and the major handles the collateral.

Warehouse lenders are critical for mortgage bankers.  It’s hard to function as a mortgage bank without one.  Having a relationship with more than one major warehouse bank, plus a local community bank, makes good business sense.  If you are an operator of a mortgage bank, pick up the phone and talk to your local bank about a mortgage warehouse line.