Southwest Bank, Fort Worth, Texas, is on the verge of making its first warehouse line of credit and is catering to a small but growing segment of the market that it calls “mini-correspondents.”
The bank declined to name the borrowing institution, but said it has several new customers lined up awaiting final approvals.
“The line will close very soon,” said David Frase, senior vice president in charge of warehouse lending for the bank. “These are small emerging correspondents and we'll be lending in Texas only for now.”
The firms that borrow from Southwest must have a minimum net worth of $50,000 but Frase cautions that although that threshold looks low, the firm originating the loan in the primary market must have a committed investor on the other end. “They need to have a permanent investor for the loan,” he said.
Frase explained that “A lot of these firms will be former brokers,” adding that many of the companies he has in mind employ three to five full-timers.
Frase joined Southwest Bank about a year ago from the warehouse division of SWS Group, a bank holding company based in Dallas.
SWS controls Southwest Securities, FSB, a depository, but despite the similar sounding name it has no ownership ties to the Fort Worth bank that Frase now works for.
