Competitive pressures have opened the door for a new use of warehouse lines of credit: providing mortgage bankers with financing to originate loans that fall outside of the qualified mortgage definition.

Non-QM lending is just the latest new product that warehouse providers, also known as warehouse lenders, are offering in an industry channel that has gone from moribund to highly competitive in just a few years. Warehouse lenders are now letting their mortgage banker partners extend their lines of credit to other originators, and are also offering hospital lines to finance buybacks, servicing-advance lines for working capital and even lines secured by mortgage servicing rights, said Bob Rubin of The Business Loan Connection, a consulting firm based in Southfield, Mich.

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