Texas Capital starts e-mortgage purchase program to create liquidity

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Texas Capital Bank, which already provides warehouse financing for e-mortgages, will now purchase these loans off those lines as it looks to increase liquidity for this product.

"In the long term, e-mortgages hold the promise to help lenders gain operational efficiencies, realize cost savings and experience increased borrower satisfaction," Jack Nunnery, president of mortgage finance at Texas Capital, said in a press release. "Having a knowledgeable counterparty that can help remove some of the uncertainty can be essential to a mortgage lender's success as they embark on their own digital transformation."

Knowing that there is an investor willing to purchase these loans should ease mortgage lenders' fear of being stuck with them on their warehouse line.

"The outstandings on the warehouse side have been small to date. By adding investor takeout options, we're providing end-to-end financing that helps more lenders implement e-mortgages, thereby better positioning them for the future," Nunnery said in a follow-up response.

After Texas Capital purchases the loans, they will be resold on the secondary market to Fannie Mae and Freddie Mac.

Despite their existence since the early 2000s, e-mortgages have remained relatively rare because few warehouse lenders are willing to fund these transactions.

There is a list of eight warehouse lenders on the Freddie Mac website that the government-sponsored enterprise said can fund e-mortgages to sell to it, which, along with Texas Capital, includes Bank of America, EverBank (which is now known as TIAA Bank), Flagstar, LegacyTexas, Merchants Bank of Indiana, Origin Bank and People's United Bank.

All of those except LegacyTexas are also on Fannie Mae's list of warehouse banks funding e-mortgages, along with ArcLine Lending, Benchmark Bank, Customers Bank, First Funding and Guaranty Bank and Trust.

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Digital mortgages Warehouse lenders GSEs Correspondent Mortgage technology Fannie Mae Freddie Mac