As we’ve come in to a calm few days here with little news of major meltdowns we’ve been thinking about who will be next. It’s not just a sick complusion to find the next train wreck; rather an important part of providing customers with excellent service. How? Excellent service begins with delivering. If you cannot deliver you have no shot at being excellent.
Consumers demand excellence. At a time like this my team refuses to be caught in the midst of a major corporate meltdown - leaving our customers out to dry. Our customers are too important to us - we want to place them with entities that can fund their loans; and I know you feel the same.
So where can you look to get a feel for the lay of the land and the health of some of the larger mortgage companies? Well one good place to look is on the “approved investor” lists of the major warehouse credit lenders. For those of you that don’t know the term “warehouse credit” it refers to short-term credit made available to non-depository (and depository) mortgage lending companies. This credit allows mortgage companies to fund loans and then sell them to investors.
When the loan is bought by the investor the principal of the loan goes back to the warehouse lender and the fees, interest rate spread and any other fees go to the mortgage lender.
Why follow the warehouse lenders?
The warehouse lenders are a good gauge of company health because as short-term creditors they are in a risky position. They are only paid when an investor purchases the loan from the mortgage company and the funds are reimbursed to the warehouse credit line. This puts warehouse banks in “1st loss” position should an investor stop funding prior to purchasing loans funded by money off of these warehouse lines of credit. This makes them very wary of which investors they approve to purchase loans.
Their approved lender list is essentially a vote of confidence by them that the investors will be able to meet their obligations to successfully purchase a loan from the originator - thus repaying the warehouse bank. Clear as mud?
So which banks are the warehouse lenders concerned about?
When we look at warehouse lenders and their approved investor list we must remember that this is just an update of who they are willing to accept purchase agreements from on the investor side. Whether they have additional information than the rest of us is unknown. What is known is that they, as an institution, have chosen to accept or reject investors based on their analysis.
With that said Flagstar (a warehouse lender) recently revised its approved lender list, removing some well known names. Some are posthumus revisions but others are rather intriguing. Below is a direct quote from an email to their warehouse customers.
Disclaimer: The views expressed by Flagstar are not neccesarily those of BlownMortgage.com. BlownMortgage.com does not make opinions on or suggest the health of any of the investors listed below. This is merely a reposting of a communication updating Flagstar’s approved lender list.
Phew.
To: All Flagstar Bank Correspondent Customers
From: Wholesale Lending
Subject: Warehouse Eligible Investor List
Date: 8/3/07Please be advised the following companies are being removed from the eligible investor list:
American Home Mortgage Holdings, Inc.
1st Advantage Mortgage.
1st National Lending Services.
Alliance Bancorp.
American Brokers Conduit.
Merrimack Mortgage Company.
Impac Funding Corp.
Plaza Home Mortgage, Inc.
Nationstar Mortgage, LLC.
Freedom Mortgage Corporation.
Taylor, Bean & Whitaker Mortgage.
Freemont Investment & Loan.
Virtual Bank Mortgage.
Some of these are comedy. Fremont? Just being removed? A few months late on that one. There are some other intriguing names on that list that should raise an eyebrow or two.
Now as I said, just because a company decides to stop doing business with another company doesn’t mean that others share that opinion. As I said before, I just follow warehouse banks to see where they think the safe harbors are in the storm. They are the ones putting millions of dollars on the line - they protect their interests by choosing the partners that they think will most-likely be able to meet their obligations.
Do with this information what you will.
If anyone has updated warehouse approved investor lists they’d like to share I’d be happy to review them.
Read More...
[Source: Blown Mortgage]
No comments:
Post a Comment