With Warehouse Boost FAMC Eyeing $40B in Production

Franklin American Mortgage Co. of Tennessee has received the green light on $500 million worth of new warehouse lines -- additional facilities that the firm says will allow it to double its anticipated 2009 originations to $40 billion within two years. Over the weekend the nonbank finalized a new $300 million agreement with Credit Suisse and a $200 million commitment from Bank of America. Combined with its existing warehouse facilities, FAMC expects a major boost in originations. Company president Dan Crockett told National Mortgage News Online that the firm will use the new facilities to continue expanding its three lending channels: retail, correspondent, and wholesale. Asked about the prospects for wholesale -- a channel that many firms have exited in the past 18 months -- Mr. Crockett said he anticipates maintaining 30% to 40% of FAMC's total production there. However, he noted that Washington policies in regard to wholesale could be a concern if brokers continue to be driven from the business. Like the wholesale niche, warehouse lending has come under extreme pressure but Mr. Crockett said lines are becoming more available and stable of late. He speculated that the lower risk produced by today's tight underwriting standards has reached the point where it is encouraging new involvement. While one of FAMC's warehouse providers, BB&T, may not remain committed long term to providing the warehouse facilities it acquired from failed line provider Colonial Bank, Mr. Crockett is confident his company can replace the funding through transactions with other providers. In addition to its new lines with Credit Suisse and BoA, FAMC has been in discussions with Freddie Mac and Natty Mac about their warehouse lending pilot program. The lender also has been in "heavy negotiations" with Citigroup in regard to a line.