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Current Warehouse Lending Issues

Current Warehouse Lending Issues. Presented by Michele Perrin Perrin & Associates July 9, 2009. Warehouse Lending Questions on Everyone’s Minds. Who’s still lending? Who can get a new line? What will it cost? Non-traditional sources of financing What if you can’t get a line?.

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Current Warehouse Lending Issues

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  1. Current Warehouse Lending Issues Presented by Michele Perrin Perrin & Associates July 9, 2009

  2. Warehouse LendingQuestions on Everyone’s Minds • Who’s still lending? • Who can get a new line? • What will it cost? • Non-traditional sources of financing • What if you can’t get a line?

  3. Who Is Still Lending? • 12 Mid-Market Lenders • Mostly “Taking Applications” • May require significant share of wallet • Some are very regional/narrow in scope • 3 Broker-to-Banker Lenders • Very expensive and restrictive • 4 Large Cap Lenders • Minimum net worth $15-30 million

  4. Who Can Get a Line? • Companies with net worth of over $15MM • Companies with deposits of over $5MM • Very successful companies with no losses • Strong alliances with correspondent investors • Companies in Chicago (!)

  5. What Will It Cost? • LIBOR floor of 2.50% or more • Margin of 2.75% or more • Some lenders have floor of 8% or more • Facility fees of .25% to 2.00% • Expect all-in effective rate of 6.00% or more

  6. Example of Warehouse Cost

  7. Non-Traditional Sources • Local Banks—especially where you do business or have a relationship • Private Equity—even friends and family • Affiliation with a credit union or bank • Buy a bank • Rob a bank!!

  8. What If You Can’t Find a Line? • Retail Originators can broker out loans—less risky, too • Use electronic delivery to investors to speed up turn times • Sell to FNMA directly on ASAP • Raise prices, decrease volume and increase margins • Switch to an honest profession!

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