Magazine article American Banker

Countrywide Raises Capital to Fund Warehouse Lines for Smaller Banks

Magazine article American Banker

Countrywide Raises Capital to Fund Warehouse Lines for Smaller Banks

Article excerpt

The plan by Countrywide Mortgage Investments to beef up its capital through a secondary offering of seven million shares marks the start of a new drive into warehouse lending.

"We want to raise capital to fund the expansion of both our warehouse lending and our conduit programs," said Mike Perry, president of the Pasadena-based real estate investment trust.

Countrywide Mortgage is a major player in the conduit business, but heretofore has made less than 25 mortgage warehouse lines.

Such lines are used by mortgage banks to fund loans that have been closed but not yet sold to investors.

Niche Picked Out

Countrywide Mortgage Investments will specialize in extending credit to small and medium-size mortgage banks. "We intend to concentrate on companies with net worths of $300,000 to $5 million and to provide loans of between $1 million and $20 million," said Mr. Perry.

The two-year-long refinancing boom has greatly increased the need for credit in the mortgage industry, a need that is especially acute among smaller companies that are of little interest to most commercial lenders. This, in turn, has attracted new providers of credit to the small market.

Because lower-end mortgage banks receive little or no financing from the investment banks that are a big source of funding for large companies, lending rates in that market have remained hefty, according to Richard Peterson, vice president of Norwest Bank Minnesota.

"Loans to companies with net worths below $1 million are based on prime, and are usually prime plus something," he said. …

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