For this reason, bankers consider several factors before they make a decision about whether to offer a company a warehouse line of credit. These factors include net worth, credit history, preparedness, experience, character and credibility.

When it comes to net worth, the higher your net worth, the more options you have regarding which investors you can sell to; the better the terms of a warehouse line; and the more money you can leverage. Typically, the amount you can leverage ...quot; or borrow ...quot; is a multiple of 15 or 20 times your net worth. For example, if your net worth is $100,000 and the ratio is 15-to-1, you can get a line of credit of $1.5 million. If your net worth is $500,000, your line of credit would be $7.5 million.

Short of raising additional capital, your net worth is what it is. But you can get your financial house in order before you make that first step. Hire a licensed certified public accountant with a mortgage-banking background to audit your financial statements and guide you through the transition. Some warehouse lenders also require current interim corporate financial statements, so you also should have those available.

You also must determine the category of mortgage banking in which you fit (Federal Housing Administration banker, nonprime lender, etc.). For example, a warehouse lender might acquire primarily high-quality nonconforming Alt-A mortgage loans ...quot; loans to borrowers with grade-A credit but high loan-to-value ratios or those who don't meet certain documentation or verification requirements. This represents a growing segment of the population that includes small-business owners, retirees and the self-employed who do not document their income sources but are solid credit risks. Before selecting a lending category, ensure that you have buyers for your loans once they are closed.

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