Magazine article American Banker

Warehouse Lending Lifted by the Refi Surge in 2Q

Magazine article American Banker

Warehouse Lending Lifted by the Refi Surge in 2Q

Article excerpt

Byline: Paul Muolo

Warehouse lending conditions continued to improve in the second quarter; commitment volumes rose for most players - thanks in large part to a mini-refinancing wave sweeping the nation.

Exclusive survey data compiled by National Mortgage News said industrywide commitments fell slightly, to roughly $27 billion at June 30 from the year earlier. (NMN assumes it has captured 70% of the warehouse market.)

But the results belie the fact that PNC Financial Services Group Inc.'s flagship bank subsidiary is winding down the warehouse division of the former National City Corp., once a top player in the market. Also, Colonial Bank, the nation's No. 2 warehouse provider, is now part of BB&T Corp., which cut loose some of Colonial's customers when it took over the troubled bank last fall.

In other words, in the second quarter of 2009 National City and Colonial were still actively offering warehouse lines, but in National City's case, this is no longer true. (PNC is to wind down National City's warehouse unit for good by yearend.) With the short-term outlook for residential loan production greatly improved from a few months ago (some lenders think the industry could wind up just shy of last year's $1.9 trillion origination mark), warehouse lines are in demand.

Of course, warehouse providers, for the most part, continue to be in the driver's seat when it comes to setting terms. Michele Perrin, who brokers warehouse lines through her firm Perrin & Associates, sees conditions improving slightly for nonbank borrowers.

She recently brokered a line of credit for a home-builder-owned lender and received multiple offers, something that probably would not have occurred a year ago.

She and Larry Charbonneau, who also advises clients on warehouse deals, both cite a major positive on the horizon: the entry into the sector of MetLife Bank, a subsidiary of the insurer MetLife Inc. …

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