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sleepless-in-Seattle
Cherry Bomb


Joined: 04 Jul 2008
Posts: 148

National City/PNC news
PostPosted: Wed Mar 11, 2009 10:30 pm Reply with quoteBack to top

How many wholesalers will be affected by National City/PNC pulling out of the warehouse line biz?

It is my understanding that many lenders have lines with National City. I believe Assurity is one of them. Others?
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mortgageinsurance
Flash in the pan


Joined: 16 Feb 2009
Posts: 30
Location: Washington, D.C.

Re: National City/PNC news
PostPosted: Thu Mar 12, 2009 1:20 am Reply with quoteBack to top

You will see a significant number of companies go out of business with the pullout of NC/PNC & Guaranty. Its impossible to not have carnage when 27% of the warehouse lines disappear overnight. This subject was brought up today at the house financial services hearing by the MBA. It is widely suspected that three additional warehouse lines will be shutting down in the next sixty to ninety days as well.

Congress better addres this nightmare scenario because this will put everyone out of business.
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ALPHAxDOGG
Flash in the pan


Joined: 24 Aug 2007
Posts: 86

Re: National City/PNC news
PostPosted: Thu Mar 12, 2009 1:44 am Reply with quoteBack to top

Poof read the article. This pull-out does not occur overnight. It is a 12 to 18 month notice of their pull-out. It is right in the article.

On a side note, I do agree Congress had better step in, as there is no new capacity coming online anytime soon, and when you see this kind of severe contraction it can only lead to the Decimation of the industry.
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Calvin Hamler
Flash in the pan


Joined: 23 Dec 2008
Posts: 67
Location: Castle Pines, CO

Re: National City/PNC news
PostPosted: Thu Mar 12, 2009 1:50 am Reply with quoteBack to top

sleepless-in-Seattle wrote:
How many wholesalers will be affected by National City/PNC pulling out of the warehouse line biz?

It is my understanding that many lenders have lines with National City. I believe Assurity is one of them. Others?


I can confirm that one of our warehouse lines is with National City. I did take a call from them today indicating that PNC has decided to get out of the warehouse lending business over the next 12 to 18 months, following the lead of others.

I can also confirm that I have personally spoken with at least two other warehouse lenders in the last couple of days (now that we have our 2008 audited financials, which are a precursor to application) that are excited to have Assurity as a client, so I anticipate adding another credit facility or two right away to supplement our other existing facilities. Nat City isn't freezing credit facilities overnight or anything crazy like that; hence the 12 to 18 month timeframe for withdrawal.

If we hadn't been profitable every year for the last 7 years, and we weren't profitable year-to-date, and if we didn't have a squeaky-clean balance sheet and the best people in the industry working for us, along with some of America's best mortgage brokers signed up in our wholesale channel, wich we ardently support, I would be worried. However, given our current financial and competitive position, I therefore am not.

Frankly, this is just more of the same - some rise to the occasion in the face of adversity, and some simply curl up and go away. Not everyone is going out of business, folks, but I agree with the comment that many will, directly related to this announcement. With warehouse lending capacity down 90% since 2007 BEFORE this announcement by PNC / Nat City today, it's clear that only the best of the best are going to continue to be offered credit facilities by those that know how to manage their risk.

We are one of them, for the reasons stated above. Even though PNC / Nat City has decided to exit the warehouse lending business, I still describe them to everyone as our very best business to business relationship. This is a corporate decision made by a bank to manage its risk - it isn't personal. Hey, in business, you gotta do what you gotta do.

The free market will operate to ensure that the strong survive and capital will be committed to ensure a good return on investment on warehouse credit facilities for companies in good health and financial standing like Assurity Financial. But there definitely aren't enough chairs to sit in when the music stops, so everyone has to ask, "Who gets a seat?".

Make sure your executive management team is on the ball folks!!!

_________________
"When they came for everyone else, I said nothing. Then, when they came for me, there was no one left to listen."

Calvin B. Hamler, AMP
CEO & Managing Member
Assurity Financial Services, LLC
www.linkedin.com/in/calvinhamler
www.assurityfinancial.com
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ALPHAxDOGG
Flash in the pan


Joined: 24 Aug 2007
Posts: 86

Re: National City/PNC news
PostPosted: Thu Mar 12, 2009 1:59 am Reply with quoteBack to top

Calvin,
It is great that you provide such insight. My questions is simple.....Do you see any new warehouse Lenders/Lines becoming available to companies such as yoursef or others in the industry? At some point, if Congress does not provide some type of enticement for lenders or private capital to provide such lines, that capacity will be non-existant, ie, bringing the industry to a screeching halt.

You can originate a million loans, but the few lenders left need the capaicty to fund those loans, and right now capacity is shrinking like a
n a k e d man standing in the snow.....
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mortgagemess
Nitroglycerin


Joined: 09 Jan 2008
Posts: 561

Re: National City/PNC news
PostPosted: Thu Mar 12, 2009 2:06 am Reply with quoteBack to top

ALPHAxDOGG wrote:
Poof read the article. This pull-out does not occur overnight. It is a 12 to 18 month notice of their pull-out. It is right in the article.

On a side note, I do agree Congress had better step in, as there is no new capacity coming online anytime soon, and when you see this kind of severe contraction it can only lead to the Decimation of the industry.


Congress stepping in to help mortage brokers is about as good as them helping homeowners....

They are only interested in helping the Harvard Mafia of Wall Street...
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mortgageinsurance
Flash in the pan


Joined: 16 Feb 2009
Posts: 30
Location: Washington, D.C.

Re: National City/PNC news
PostPosted: Thu Mar 12, 2009 2:25 am Reply with quoteBack to top

The announcement today leave the marketplace with 7 warehouse lenders still operating in the US and with three more about to announce they will be existing warehouse lending in the very near future as well we will be saddled with only 4 warehouse lenders in the US. This cuts off funding for credit unions, small & medium & large banks, mortgage bankers, and mortgage brokers.

Congress has to step in to not only save lending and quickly otherwise this country will wind up with a European model of mortgage lending. We are one step away from that prospect now.

I don't care who you are--Assurity or Mt. Holyoke Credit Union--four remaining warehouse lines means that Assurity isn't big enough to stay in the game when you are competing against major banking institutions who also will be vying for these limited warehouse lines.
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Calvin Hamler
Flash in the pan


Joined: 23 Dec 2008
Posts: 67
Location: Castle Pines, CO

Re: National City/PNC news
PostPosted: Thu Mar 12, 2009 2:52 am Reply with quoteBack to top

Globally, if every single warehouse lender were to exit, then yes, every single non-bank mortgage company would be out of business. I don't think anyone can argue that one.

That is, unless the Fed opened the discount window to non-depositories, which they won't.

Or, unless the GSE's provided warehouse financing, which they might, but strings will be attached.

So what's going to happen? I don't know, and neither does anyone is the honest answer.

What do I THINK is going to happen? I think that we are experiencing a capitulatory market event that is close to defining a bottom in warehouse lending capacity shrinkage. Call me a contrarian, but that's what I think is going on.

If you place your faith in the concept of the free market, I think you make the case for smart - albeit limited - capital, to continue to be committed to warehouse lending. Hey, someone else out there who is a contrarian has to see this as a HUGE opportunity. Enter the banks that are still doing it and that, per my conversations with them as of the last few weeks, are still writing new committments - CAUTIOUSLY - because they see opportunity.

Candidly, these guys can name their own price! Being on the other side of the negotiating table from them is no picnic right now - I'll admit that!!! But in the end, it comes down to two things: Are you among the very best of counterparties that can present themselves to these savviest of bankers and investors to make the cut for their limited funds, and what price are you willing to pay?

I really do think you will see new entrants come into the market soon (probably third quarter 2009), but we aren't there yet. Until then, it's going to be dog-eat-dog for the remaining warehouse credit capacity out there.

Who knows who all will survive? Beats me.

After all, an asteroid can strike Earth at any time, right?

I have a saying written on the whiteboard in my office that I find helps to provide me with clarity when faced with a difficult situation or stressful business problem. I have shared it before, but will share it here again, in hopes that it may help someone else in their daily decision making processes: "If you weren't afraid of whatever it is that you are afraid of, what would you do?"

I'm going to keep building our business, because it has been profitable every year of our existence, including this one. If that asteroid strikes Earth, then so be it. But right now, based on all of the information in front of me, that doesn't seem to be imminent for our company, though it may be for others.

I will pay the public, our employees, and our customers the courtesy of letting them know if that changes, if I ever come into posession of such definitive knowledge of that imminent asteroid. I'll give you transparency of information to the point of a fault on that one.

THE APOCALYPSE IS NOT HERE AND NOW.

_________________
"When they came for everyone else, I said nothing. Then, when they came for me, there was no one left to listen."

Calvin B. Hamler, AMP
CEO & Managing Member
Assurity Financial Services, LLC
www.linkedin.com/in/calvinhamler
www.assurityfinancial.com
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sleepless-in-Seattle
Cherry Bomb


Joined: 04 Jul 2008
Posts: 148

Re: National City/PNC news
PostPosted: Thu Mar 12, 2009 2:53 pm Reply with quoteBack to top

Thank you Calvin. I knew you'd jump in on this one and shed some light.

Do you think the previous poster is correct in stating there are 7 US warehouse facilities and 3 will be closed soon? Are the numbers 7 and 3 correct?

Thanks for taking the time to post here.
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Calvin Hamler
Flash in the pan


Joined: 23 Dec 2008
Posts: 67
Location: Castle Pines, CO

Re: National City/PNC news
PostPosted: Thu Mar 12, 2009 8:43 pm Reply with quoteBack to top

sleepless-in-Seattle wrote:
Thank you Calvin. I knew you'd jump in on this one and shed some light.

Do you think the previous poster is correct in stating there are 7 US warehouse facilities and 3 will be closed soon? Are the numbers 7 and 3 correct?

Thanks for taking the time to post here.


Sleepless,

You are certainly welcome.

The number left depends on how you want to measure it. There are several left that are active but just not writing new commitments. I have a list of 16 active to semi-active, but only show approximately 7 still taking new commitments (some are 60 days out on taking new commitments). As far as who may or may not exit going forward goes, I don't have a clue or any insight to provide there.

My list is not all-inclusive because I'm told that some local and smaller regional banks are starting to cut one-off deals, but that's just heresay, because I don't know the names. I also hear that hedge funds are eyeing the warehouse lending space to put capital to work - again this is just heresay and I don't know of any specifically, other than one that contacted me directly to explore the idea, based on my posts here.

Hope this helps.

_________________
"When they came for everyone else, I said nothing. Then, when they came for me, there was no one left to listen."

Calvin B. Hamler, AMP
CEO & Managing Member
Assurity Financial Services, LLC
www.linkedin.com/in/calvinhamler
www.assurityfinancial.com
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