Warehouse Acceptance of E-Mortgages Inevitable

The acceptance of e-mortgages by warehouse lenders is inevitable, but banks will have to get more comfortable with the product before it becomes a reality. According to panelists speaking at the Mortgage Bankers Association's trade show in New York—including Ken Logan, a managing director at Wells Fargo, and Elaine Batlis, senior vice president of Silvergate Bank—warehouse providers must be assured of their "senior" position in an e-mortgage. Such assurances must be perfected in the electronic documents so that banks know they will be repaid. A second issue, they both said, is the "rule of three." Logan explained that there need to be three primary investors (not including any scratch-and-dent investors) willing to buy any mortgage loan that is originated in order to assure the warehouse provider will be repaid. Currently, there are not three loan purchasers willing to buy these loans, he said. He added that consumers also have to get comfortable with the premise. Batlis said acceptance by warehouse providers of e-documents will take place when primary and scratch-and-dent investors come together on the issue.