Warehouse lines that play an increasingly important role in the housing finance market are more available for some nontraditional loan types than others, the latest Mortgage Bankers Association survey shows.
The share of warehouse lenders offering second-lien facilities and/or sublimits has been the highest it has been since the group began its survey in the first-quarter of 2024 at 62%, but the percentage for funded home equity lines of credit was lower at 27%.
Funded HELOCs represent a smaller portion of the second mortgage category, which includes a wide range of closed and open-ended subordinate liens. Availability for funded HELOCs may be lower because warehouse lenders have less certainty over funding timelines and balances.
The numbers point to an important consideration for nonbanks, which have become the dominant players in the housing finance market and often rely heavily on interim funding lines they typically get from depository institutions to initially close loans ahead of sales to investors.
Funding availability for some nontraditional products, such as loans made outside the standard qualified mortgage definition, has proved vulnerable to market disruptions like the one seen early in the pandemic in the past.
The MBA's current numbers show 88% of warehouse lenders surveyed offer facilities/sublimits for first-lien non-QM loans held for sale, showing availability of funding lines in that category has been second only to those for traditional primary mortgages at 96%.
The majority or 62% of warehouse lenders said they provide facilities/sublimits for first-lien business purpose loans. The share offering construction and renovation facilities/sublimits was 58%.
Other percentages for the share of warehouse lenders offering facilities/sublimits by product are as follows: reverse mortgages, 42%; loan repurchases, including early payment defaults and payoffs, 38%:, Ginnie Mae early buyouts, 31%; and servicing advances, 15%.
Capital rules for banks providing warehouse lines may undergo revision as a result of a regulatory proposal currently undergoing review in the United States.
