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Current Warehouse Lending Challenges: Insights and Solutions by Michele Perrin

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Join Michele Perrin from Perrin & Associates as she addresses key warehouse lending questions faced by businesses today, including who is still lending, who can obtain new lines of credit, and what the associated costs are. Discover non-traditional financing sources and strategies if you cannot secure a line. Learn about the requirements from mid-market lenders and large capital lenders, including net worth and deposit criteria. Gain insights into effective rates, facility fees, and valuable alternatives to traditional lending, along with real-world examples of navigating current market conditions.

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Current Warehouse Lending Challenges: Insights and Solutions by Michele Perrin

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  1. Current Warehouse Lending Issues Presented by Michele Perrin Perrin & Associates July 9, 2009

  2. Warehouse LendingQuestions on Everyone’s Minds • Who’s still lending? • Who can get a new line? • What will it cost? • Non-traditional sources of financing • What if you can’t get a line?

  3. Who Is Still Lending? • 12 Mid-Market Lenders • Mostly “Taking Applications” • May require significant share of wallet • Some are very regional/narrow in scope • 3 Broker-to-Banker Lenders • Very expensive and restrictive • 4 Large Cap Lenders • Minimum net worth $15-30 million

  4. Who Can Get a Line? • Companies with net worth of over $15MM • Companies with deposits of over $5MM • Very successful companies with no losses • Strong alliances with correspondent investors • Companies in Chicago (!)

  5. What Will It Cost? • LIBOR floor of 2.50% or more • Margin of 2.75% or more • Some lenders have floor of 8% or more • Facility fees of .25% to 2.00% • Expect all-in effective rate of 6.00% or more

  6. Example of Warehouse Cost

  7. Non-Traditional Sources • Local Banks—especially where you do business or have a relationship • Private Equity—even friends and family • Affiliation with a credit union or bank • Buy a bank • Rob a bank!!

  8. What If You Can’t Find a Line? • Retail Originators can broker out loans—less risky, too • Use electronic delivery to investors to speed up turn times • Sell to FNMA directly on ASAP • Raise prices, decrease volume and increase margins • Switch to an honest profession!

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