Warehouse Line Operations 090413202510 Phpapp02

7/17/2019 Warehouse Line Operations 090413202510 Phpapp02

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Warehouse Line OperationsOutsource Management and Operational Support

Titan Lenders Corp

http://titanlenderscorp.com



Warehouse Line Lending

Warehouse lines of credit are real estate secured short-term lines of credit thatallow mortgage baners to fund loans into the secondar! maret until the loansare purchased b! the end institutional in"estors. The funding source# $the%Warehouse Lender or &an%'# generall! o(ers the necessar! funds through are"ol"ing purchase agreement to a mortgage baning compan! for fundingmortgages at closing. )ll of the loans are pre-sold in the secondar! maret to

large institutional in"estors# man! of which are *ew +or Stoc ,change listedcompanies. The warehouse line funding co"ers approimatel! a to 01 da!period between loan closing and the sale of the loans to the end institutionalin"estor.

2nterest is paid on each transaction on the number of da!s the warehouse lenderholds the mortgage loan# from the original funding date to the date the funds are

recei"ed from the mortgage purchaser. The rate charged is Wall Street 3rime orLibor plus a negotiated margin as well as a per transaction fee to co"eradministrati"e and other related epenses including the wire fee# o"ernightdeli"eries# and the custodial fee.



Current Warehouse Lending Maret

)ccording to current estimates# the capacit! in warehouse lendinghas shrun from nearl! 4511 billion in 5116 to a mere 451 billiontoda! through eposure to toic loans# fraud# repurchase demandand basic maret 7ight.

5116 5118 5119

1

1

11

1

511

51

511

51

Warehouse Lending Capacity

olume in &illions



Current Warehouse Lending Maret

;rom the pre"ious data# one can see that there is a need forincreased capacit!. Ma<or lenders ha"e left most of these businesschannels as the! focus on their own retail origination# paringmortgage operations. This has opened substanti"e opportunitiesfor communit! bans# securities =rms and other non-traditional

sources to o(er warehouse lending capacit! in a climate ofdecreased ris# higher margins and emphasis on >ualit!production. These institutions participation is seen as integral toan economic reco"er! through the housing maret.

?ead more about proposed solutions to thewarehouse line li>uidit! crisis here.

http://titanlenderscorp.com/blog

http://titanlenderscorp.com/blog



?is Mitigation

Product Risk: ) primar! reason behind the collapse of the ma<orwarehouse lenders o"er the past two !ears ha"e been the @toicA loanswith their contingent repurchase demands from low performance# earl!pa!ment default and fraud. Most of their ma<or lending partners wereentirel! built on these loansB and when the collapse began went out ofbusiness lea"ing the warehouse lenders with little or no recourse forreco"er!. Toda!# the mortgage maret is characteried b! "er! limitedproduct o(erings of the most traditional and conser"ati"e "arieties.Most loans are either )genc! or Do"ernment# and e"en these ha"e seendramaticall! enhanced underwriting standards. ;or the warehouselender# the lac of competition has created a maret climate that is risa"erse# which de=nitel! wors in their fa"or.

Titan manages warehouse lending for onl! the most ris ad"erse loans E)genc!# Do"ernment and ?ural/&ond loans. While we ha"e participatedin hard mone! operations# we will not manage the warehouse lendingaspect of such loans.



?is Mitigation

Takeout Risk: Warehouse lenders# once permissi"e of aging loans#can no longer a(ord the ris of loans not purchased in a timel!manner. Taeout ris can be managed in this maret through duediligence with regards to compliance# fraud and >ualit! loanproduction. Titan often re>uires its correspondent partners to emplo!our closing and post-closing ser"ices to mitigate taeout loss# ensure

swift salabilit! and le"erage TitanFs reps and warrants.

– ;raud checs E 2nterthin# Corelogic

– Compliance checs E T2L)/GO,3)/?O?/ST)T, CO*SHM,?/;*M) 3O2*TS I;,,S E Ma"ent# Compliance ,ase E This ensures that loans are not un-salabledue to errors in compliance.

–Closing and 3ost-Closing E Titan ;ul=llment E ?educing ris of closing errorsthat might mae loans unsalable on the secondar!.

– Titan ,perience E Should lenders refuse to purchase or fail to honor acommitment to purchase# Titan has a broad base of eperience in >uicl!repacaging loans for sale within the current maret or as scratch and dent.



?is Mitigation

Fraud: There is no wa! to entirel! insulate against fraud. Gowe"er#se"eral re>uirements# including the =nancials of the originating lender#help to mitigate losses associated with fraud. Titan manages the process7ow re>uired b! the warehouse lending institution to ensure that e"er!opportunit! to mitigate fraud is optimied.

– &orrower fraud E The most insidious form of fraudJ it can be mitigated throughthe application of reasonable fraud checs through national "endors. Titanre>uires that all loans funded under our reps and warrants e"idence somerecognied fraud chec.

– Settlement fraud E ) more subtle fraud that re>uires the warehouse line toensure that the Closing 3rotection Letter# ,rrors and Omissions and Master C3Lare con=rmed and "eri=ed with a ma<or title underwriter. Titan re>uiresbacground checs on agent attorne! and maintenance of appro"ed settlementagent lists. 2n escrow states# "eri=cation of funding to the title agent $not theescrow agent' is re>uired. )dditional due diligence is performed to ensure thatthere are no illegal aKliations or pre-eisting relationships between the agentperforming disbursement and the originator or borrower.



,perience

Titan o(ers a broad nowledge of the mortgage maret#

from escrow states to attorne! states to wet funding states. This pro"ides a uni>ue opportunit! for the warehouselender to capitalie on the safest maret opportunities

without re>uiring regional operations to manage thecompleit! of the maret. TitanFs foundation of deli"eringsafe# >ualit!# compliant loans to the secondar! pro"ides auni>ue warehouse lending eperience for the originator#allowing common sense 7eibilit! to be weighed against

the nown riss and haards of a changing maret.



)bout Titan?esidential mortgage lending is a uni>ue business model - comple# multi-faceted# and d!namic# to

be sure. ,>uall!# it is error-prone# repetiti"e# and laden with paperwor and intricate details. C!clicb! nature# the mercurial demand of and for home loans can ta lender operations to their limits.3romising mortgage businesses sometimes fail to realie their potential because the! ha"e not builtelasticit! and scalabilit! into their processes.

)t particular ris is the proper eecution of closing and post closing functions that are pi"otal formaintaining loan pro=tabilit! throughout its lifec!cle. When a lender tries to manage more "olumethan its bac oKce processes and epertise can support# >ualit! lending practices are compromised.

?is multiplies. Mistaes and dela!s interrupt wor7ow. 3ro=ts are lost. Critical business relationshipsendangered.

Titan Lenders Corp meets mortgage lendersF and communit! =nancial institutionsF need for industr!epertise# elasticit!# and scalabilit!. We pro"ide closing services, mortgage post closing, andother back-end loan processing services to correspondent# wholesale# and retail residentialmortgage lenders. Our eperience in these marets has created natural vertical integrationsinto arehouse lending management, as ell as banking and R!" operations .

Hnlie man! =rms o(ering outsource mortgage ser"icesJ we are an )merican business operating inthe continental H.S. Our "alues include eemplar! customer ser"ice# process management# and web-based technolog!. Our mission is to ser"e# support# and dominate mortgage back-o#ce$ul%llment in the residential lending industr! on a national le"el.



Warehouse Lending 3rocess;low



3ro<ections

2n general# warehouse lenders traditionall! earn appro&imately'()-*+( basis points on their mone!. Hsing an outsourcedoption for their operations# capital re>uirements for o"erhead#technolog! and personnel are "er! limited. Titan o(ers a "ariablecost option of per unit fees to be netted out of disbursement tothe correspondent lender. )s a direct per =le cost to the lender of45- per unit E depending on "olume# the lender and thewarehouse lender are able to scale their business model based onopportunit! rather than capital re>uirements.

Correspondent File Flo Chart:



Wh! Titan

Titan pro"ides a wide "ariet! of operational epertise for both the primar! andsecondar! mortgage maret. )s such# we ha"e a "er! uni>ue perspecti"e onthe re>uirements of in"estors to purchase loans# how to forestall salabilit!issues# clarif! process and procedures necessar! to a"oid repurchase# fraudand errors in production e(ecting salabilit! and tae correcti"e measures>uicl! and eKcientl! should the worst case scenario happen. We

understand the needs of the warehouse lender# the originator# the in"estorand the regulator.

Titan has not wored with a single stand-alone warehouse lender thatoperates under these speci=c parameters E with the breadth of eperience tounderstand both the primar! and secondar! marets. With a "ariable costmodel and embedded technolog!# bans# credit unions or securities =rms canenter the maret without huge in"estment in infrastructure. The! can alsopilot programs on a smaller scale# taing their capital to maret in a "er!structured# process dri"en en"ironment. When these processes are re=nedand perfected# our clients can scale up# down# regionall!# nationall!#conforming or niche.



More 2nformation )bout Warehouse

Line Lending

Contact

?uth Lee

ice 3resident

www.titanlenderscorp.com

651.569.656900 West Nartmouth )"enue

Suite LL1

Nen"er CO 81556

?uth.leetitanlendercorp.com

--------------------------------------------------;or additional >uestions# customied pro-forma or isio process

7owB please contact ?uth Lee.

http://www.titanlenderscorp.com/

mailto:[email protected]

mailto:[email protected]

http://www.titanlenderscorp.com/

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Warehouse Line Operations 090413202510 Phpapp02