The Department of Housing and Urban Development is looking at warehouse lending to see if such transactions are legitimate secondary market transactions under the Real Estate Settlement Procedures Act.
This is the first time since the agency issued Respa rules in 1992 and 1994 that it is examining this question, said a Nov. 17 notice from HUD.
Among the issues to be considered, said K&L Gates attorney Phillip Schulman, is what constitutes a bona fide warehouse line.
This question may be applied to the types of first lines of credit being granted to newly minted mortgage bankers who have moved up from mortgage brokers. Many of these originators have lines where the warehouse lender is underwriting loans and requiring the loan to be sold to it at, or soon after, closing. Schulman said such actions start to sound very similar to table funding.
HUD is asking for comments from warehouse lenders, retail lenders, mortgage bankers, wholesale lenders, correspondent lenders, mortgage brokers and others in the mortgage lending industry. The comment period ends 30 days after the notice is published in the Federal Register.
