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Warehouse Lines and Secondary Marketing by The MBSD Group |
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Warehouse Lines
 Existing
When a company's warehouse lines of credit are maxed out, that company can't grow. This problem has one of two origins: either the company is experiencing poor warehouse utilization (that is, not turning the line a sufficient number of times in a month) or the company's leverage ratio has exceeded the credit provider's limits. MBS is frequently called upon by - mortgage lenders to overcome the origins of inefficient warehouse utilization and
- warehouse lenders to assist their customers in improving loan sale processes in order to improve warehouse utilization.
MBS first reviews internal issues that may be inhibiting increased funding capacity before pursuing additional warehouse lines of credit. If it is determined that additional lines are necessary, MBS knows the major warehouse lenders and can help negotiate favorable terms, usually better than if the company were to do so directly.
For more mature companies, gestation and/or repo lines may be a solution. MBS can assist in finding and establishing these types of lines of credit.
New
The proposed HUD ruling will require mortgage brokers to fund loans on a warehouse line in order to earn yield-spread premiums. MBS can assist qualified mortgage brokers in obtaining warehouse lines. MBS realizes, however, that such warehouse lines are like loaded guns: without the proper systems and procedures for timely sale of loans, the company could easily shoot itself in the foot. MBS will work with the company to ensure implementation of systems and procedures that ensure efficient utilization of the line and maximal profit margins.
Secondary Marketing/Loan Trading
 Even the most well-run companies will be presented with serious investor related issues. Investors have been known to reneg on forward commitments or change the terms of a forward commitment. Mortgage companies, even the best of them, have been known to make mistakes that can jeopardize their investor relationships. MBS can help. After 30 years of experience, there are few investors MBS doesn't know or hasn't interacted with extensively.
Beyond problem areas, MBS specializes in the area of secondary marketing as it relates to trading whole loans or pools/bulks. This includes all residential loan products-"A" paper Agency, "D" credit, sub-prime, scratch and dent, and non-performing-in the first, second, and third lien positions.
A common frustration of many CEOs is not knowing if their loan trades are being executed at the highest possible levels. A common frustration of many secondary marketing executives is CEOs beating them up even when they know they have executed the best possible levels. MBS can assist the CEO and the secondary executive by working constructively with both to ensure that the best is being accomplished for the company. What's "best" for a company is where MBS can bring value to almost any organization. The key is to gain maximum execution without sacrificing the company's long-term well-being.
 MBS can assist in gaining maximum execution by improving a company's gain on sale through introducing new investors, working with existing investors to negotiate better forward commitments, or expanding/growing the company's secondary marketing operation to new levels, which could go as far as moving the company towards securitizations.
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