As published in Scotsman Guide's Residential Edition, September 2005.
Warehouse lines are the lifeblood of a mortgage lender’s growth. For those making the leap from broker to mortgage banker with an increasingly valuable book of business, the ability to fund loans through warehouse lines from a lender makes all the difference.
Healthy warehouse relationships are a key to your success. Having been on both sides of warehouse lending for more than two decades, I can tell you that finding the right partner is about more than receiving the lowest price and getting approved. It also is about building a long-term relationship with warehouse lenders that are a comfortable fit for your business, company culture and products offered.
Although it is important to run the numbers and examine pricing, it also is worthwhile to pay attention to the “soft” questions in warehouse lending. Look at each lender’s attitude, responsiveness and ability to provide expert advice. The way you and your warehouse lender work together will influence your business’ growth.
Whether you are just starting down this road or have secondary-market experience, here are seven tips for finding and maximizing your warehouse relationships:
1. Get to know senior management
When narrowing down potential lenders to a short list, go beyond account executives to engage your potential partner’s senior management. Find out who makes policy, who reviews exceptions and looks at approvals and who has the final word. It’s also a good idea to actually meet the senior managers.
It is important to ask many questions about decisionmakers’ backgrounds. How long have they been in the mortgage business? How long have they done warehouse lending and where? Have they worked on your side of the business? Have they worked with companies similar to yours in size, product types and so on?
Other pertinent questions could include:
What is their philosophy of doing business?
What makes them different from other warehouse lenders?
How involved do they get with customers?
What’s important in their firm’s interaction with clients such as your company?
What happens when their opinion differs from their customers’?
What are their feelings about the mortgage market’s health now and in the future?
Determine if their answers fit with your own insights.
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