The warehouse lending business is humming along nicely—unless you consider the plight of Bank of America.
Warehouse providers tracked by National Mortgage News increased their commitments from 5% to 200% in the first quarter except for B of A which has drastically cut back on that line of business, shifting it over to its Merrill Lynch affiliate.
Early last year B of A had $15 billion of commitments on its books, but that was before the mortgage bloodletting started at the firm.
At March 31 Wells Fargo & Co., once again, ranked first in terms of commitments (with $5.5 billion), but the bank’s figure is an estimate based on interviews with its competitors.
Like many large warehouse banks, Wells not only grants commitments but markets its services to correspondent funders that it also buys mortgages from. Traditionally, Wells never discloses its warehouse volumes.
Some lenders, such as First Tennessee Bank, Memphis, are seeing record commitment numbers.
First Tennessee ended June with $2.7 billion of warehouse lending commitments on its books, an all-time high for the bank. (The volumes listed in NMN’s table in this edition reflect March 31 balances.)
“There’s a lot of good business out there right now,” said Robert Garrett, executive vice president and manager of warehouse lending for the bank. “And we’re continuing to grow our volumes. The loan quality is great. It’s all government cheese.”
Compared to March 31, First Tennessee grew its commitments by 13%.
Like other financiers of nonbanks, the company is starting to gain new business thanks to Ally Financial exiting the market.
But it also increased production by hiking the maximum loan amount it will fund to its client base: $50 million compared to $30 million previously.
“We think our numbers will continue to grow,” Garrett told National Mortgage News. “We have a lot of deals in the pipeline.”
Eight months ago Southwest Bank of Fort Worth, Texas, had no warehouse lending commitments on its books. Today that figure stands at $80 million and growing.
