If the Department of Housing and Urban Development extends RESPA's reach to warehouse lending, it would severely limit the availability of funds for mortgage lending and hurt the housing recovery, according to three industry groups.
HUD is seeking information about certain types of warehouse lending arrangements that appear to look like table funding and might trigger compliance with the Real Estate Settlement Procedures Act.
The American Bankers Associations, Mortgage Bankers Association and Housing Policy Council note that warehousing lending structures have changed since HUD last reviewed the issue in 1994.
Warehouse lenders have adopted "repurchase and purchase and sale structures" due to a "range of concerns having nothing to do with RESPA," the groups say in a joint letter to HUD.
The trades insist these structures are business-to-business transactions and warehouse lenders don't gain ownership of newly originated mortgages unless the mortgage lender defaults on a warehouse line before the loans are sold into the secondary market.
"If warehouse lenders are forced to abandon these alternative structures, many would exit rather than expose themselves to the risks inherit in different models," the Dec. 22 letter says.
The ABA, MBA and HPC suggest that HUD should clarify that warehouse advances are exempt from RESPA. "The associations believe HUD may rely on current exemptions or create a new exemption for this purpose."
