MBs Need Post-Refi Plan to Get Warehouse Credit

Independent mortgage bankers counting solely on potential loan growth as a basis for their warehouse lines may find the financing particularly hard to come by, executives told attendees at the Mortgage Bankers Association's National Secondary Market Conference in Chicago. Given the refinancing boom, some originators have been trying to convince executives to give them lines by telling them that they could use the funding to "really grow," said Ken Logan, director, residential mortgage and consumer group, Wachovia Securities. "I don't want to hear that right now. The refi boom is eventually going to end. What's going to happen to them at that point?" said the executive, whose company is now owned by Wells Fargo and represents one of the few large institutions that has committed itself to the warehouse lending game at a time when some other notable players have dropped out. He and other panelists said mortgage bankers most likely to continue receiving warehouse financing are those that have strong pre-existing balance sheets and business relationships. Others may be forced to close. The MBA has sought government assistance to deal with the warehouse crisis and has found players like Fannie Mae, Freddie Mac and Ginnie Mae to be most likely to help; but there are some hurdles standing in the way of such a move, the panelists said.