As the summer draws to a close, the "green shoots" of economic revival still seem to be mere seedlings, if not a little brown around the edges. The continued sluggishness in the capital markets has been compounded by the relative inactivity of warehouse lenders in extending credit for the funding of mortgage origination. For the most part, warehousing credit continues to be bottlenecked and, of the lenders still in the business, many remain wary about the proper valuation of mortgage loan collateral.

One bright spot has been the origination of Ginnie Mae-, Fannie Mae- and Freddie Mac-eligible mortgages, the issuance of mortgage-backed securities guaranteed by the government-sponsored enterprises and an increased level of related activity in the warehouse lending market. Originators have expanded, or in some cases, shifted, their focus to mortgages that meet the selling and servicing criteria promulgated by the GSEs as demand for GSE MBS has surged over the past year.

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