Improved liquidity in the warehouse lending market is leading to price competition and reductions in credit standards, according to panelists speaking at an industry conference in New York this week.
Jack Nunnery, senior vice president at Texas Capital Bank, said that many new players have entered the market over the past year, and with projected origination volumes of under $1 trillion for 2011, available capacity far exceeds needs.
Nunnery said he knew warehouse lenders would compete for market share on price, but he and fellow panelist Elaine Batlis are concerned about competing on credit terms, and being forced to lower their standards.
He suspects much of the concern stems from new entrants, seeking to gain traction in the sector.
Batlis, senior vice president, warehouse lending manager at Silvergate Bank, noted that the lower credit requirements concern her, and asked rhetorically whether the industry might have short-term memory loss.
Lower credit requirements from a warehouse provider are not necessarily the best option for a mortgage banker, she said. Batlis warned that loose standards could translate into that warehouse provider not being in the business for the long haul.
The two made their comments at the Mortgage Bankers Association’s Secondary Market Conference in New York.
