Banks Now Seen as More Willing on Warehouse Lending

Large banks increasingly are opening up the warehouse spigot for independent mortgage banking firms and it looks as though government assistance may not be needed, according to the Mortgage Bankers Association. "We are encouraged by the information we are receiving from our members that lines have opened up a little bit," said MBA chairman Robert Story at a press briefing. However, the trade group would like to see more liquidity for nonbanks in need of financing. One of the nation's largest warehouse providers is National City, which is controlled by PNC Financial Services. PNC has made little effort to sell the division and plans to close it by midyear unless a committed buyer steps forward. Warehouse lending began to dry up in the fall of 2008 when Lehman Brothers filed for bankruptcy and other Wall Street firms left the sector. Over the past year MBA and other industry groups have been urging the Treasury Department to provide some type of government support for warehouse lending but little has been accomplished. MBA believes the private sector (mostly banks) is finally coming back to the sector, albeit at reduced levels. MBA noted that mid-sized banks are returning to profitability, which could spur more entrants to the sector.