Not only are residential loan applications booming, but nonbanks increasingly are tapping their warehouse providers for additional credit.
According to interviews conducted by National Mortgage News this week, some firms have doubled their commitment requests compared to three months ago.
“We're expecting August to be a big closing month,” said Paul Best, senior executive in charge of warehouse lending at People's United Bank, Bridgeport, Conn. “We're bracing for a lot of wires.”
People's currently has upwards of $475 million in warehouse commitments compared to about $100 million earlier in the year. “We're averaging about two new accounts a month,” he said.
Jerry Davis of View Point Bank of Texas said "temporary overline" increases are occurring at his warehouse bank “with clients that have an appropriate level of capacity.” He said these nonbank primary market lenders “need to make sure they will have the extra amount for month end refinance activity.”
But Davis noted that “many” mortgage firms had already obtained more capacity than they could ever use – because the market has turned in their favor. He added that a few months ago (when application volumes were much lower) some warehouse providers were “begging for business” by “buying it without any usage requirements.”