Chemical Residential Mortgage Corp. announced last week a plan to significantly speed up payment for the home loans it buys.
Called Wholesale Express, the program would allow Chemical to buy a loan from a mortgage banker in as little as 24 hours from the time he closes a loan with a consumer, a sharp decrease from the current seven to 10 days, an official at the bank said.
The Usual Routine
Typically, that time is taken up by collecting documents and checking the soundness of the loan before the wholesale buyer agrees to give the mortgage banker any money.
Terry Hall, executive vice president at Jacksonville, Fla.-based Chemical Mortgage, says Chemical has found a way to speed up the process so that a loan that closes at the mortgage bank one day can be paid for by Chemical the next.
Mr. Hall declined to discuss the plan's details.
The Turnaround Factor
If it works, the plan will make Chemical the fastest wholesale purchaser and position it to increase its already sizable presence in wholesale production.
Several mortgage bankers said funding turnaround time was one of the major factors, along with the price of a loan, that mortgage bankers take into account when deciding to whom they will sell their production.
Faster payment would allow small retail lenders with limited warehouse lines of credit to increase their volume of loan production without raising their credit levels.
Alternatively, lenders could maintain the volume they currently issue while reducing their lines of credit.
Since retail lenders pay fees and interest on their warehouse credit lines, either scenario would save them money. For those who wish to increase volume, they could do so without increasing their credit.
Lenders must be preapproved to participate in the program. Mr. Hall would not discuss how a bank would qualify. Once approved, the lender may use the new plan or the standard wholesale program for any loan Chemical buys.
With $12.60 billion in loan production last year, Chemical Bank and its affiliates ranked fifth in originations. Of that, $ 10 billion was purchased from. brokers or correspondents.
Growing Share of the Pie
Chemical Bank has been pursuing the mortgage banking business aggressively and officials at the bank hope the program will allow them to increase their market share even more.
Chemical Mortgage has been testing the plan for the past three months with 12 companies around the country.
It is now available to qualified lenders in 48 states through Chemical Mortgage's four wholesale offices.