Banks that extend warehouse lines of credit to non-depositories are suffering from a usage drought on their loans, forcing them to consider other asset classes to finance, including mortgage servicing rights. According to industry advisors and warehouse officials, there are at least half a dozen large banks that are dipping their toe into the MSR financing pool or contemplating such a move. “From what I’m seeing, a number of warehouse banks are looking...

One warehouse executive, speaking under the condition his name not be used, said “Luckily for us, compared to January, things are great.”

An East Coast-based warehouse executive, requesting anonymity, said he has approached his credit board about such a change, and his waiting to hear back from them.

Banks that extend warehouse lines of credit to nonbank originators saw their commitment levels fall 39 percent in the first quarter compared to the same period a year earlier, yet another sign that the origination market was extremely weak during the first three months of 2014. On a sequential basis, commitments dropped a more benign 10.8 percent, but it’s not unusual for some firms to keep a line open, even if they’re not utilizing their power to borrow. According to Inside Mortgage Finance estimates, banks and nonbanks had $27.0 billion in warehouse commitments on their books as of March 31, compared to $31.0 billion on December 31, and $45.0 billion a year ago. One active warehouse bank had...[Includes one data chart]

The sphere of mortgage lending that will exist outside the parameters of the qualified-mortgage standard established by the Consumer Financial Protection Bureau represents an attractive opportunity for both lenders and bond buyers, but skittish investors need to be won back before they return and participate to any significant degree. That was one of the key take-aways from a webinar sponsored this week by Inside Mortgage Finance, an affiliated publication. Non-QM mortgages will exist...

One warehouse executive, requesting anonymity, said usage rates for the fourth quarter and the first two months of 2014 “have been very low.” He gave a range of 20 percent to 50 percent.

Warehouse lines of credit extended by commercial banks to non-depository lenders fell a modest 11.8 percent in the fourth quarter on a sequential basis, but executives who work in the sector are reporting usage ratios as low as 20 percent. Based on exclusive survey figures compiled by Inside Mortgage Finance, warehouse providers had an estimated $30.0 billion in commitments at Dec. 31 compared to $34.0 billion at the end of the third quarter. But a commitment is...[Includes one data chart]

Prospect Mortgage had roughly $975 million in committed warehouse lines at yearend. Its three largest providers include UBS Securities, Bank of America/Merrill Lynch and Fannie Mae.

Under the terms of the credit facility, PennyMac can sell RBS “newly originated mortgage loans that it purchases from correspondent lenders.”

Most of the underlying mortgages have terms of six to nine months, but with a warehouse line in place the terms could range from three to five years.