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5 Things to Look for in a Residential Mortgage Warehouse Lender

Mortgage originations have risen substantially since the depths of the financial crisis and the market is doing very well at the moment. However, while the markets are up and interest rates are down, IMBs need to be aware that they could turn very quickly. The number of warehouse lenders in the industry increased with the increase in IMB market share, and—similar to the IMBs—competition is high for growing warehouse portfolios. In this latest challenging cycle, rather than looking for the lowest pricing on a line, IMBs should make sure they are working with the right partners for the short- and long-term strategy.



Look for a mortgage warehouse bank that has a strong financial profile and history and is supportive of the mortgage warehouse business.

The financial crisis of 2008 caused many mortgage warehouse lenders to leave the market. Though that downturn was by far the largest in recent decades, mortgage banking is a cyclical business and affected by changes in the overall economy. Your provider should demonstrate that they understand the industry and have been a consistent lender through downturns.

In addition, if your warehouse provider also originates or purchases loans, they may be your competitor that now has a window into your organization. Further, if you both borrow from and sell to your warehouse provider, issues that may arise on the investor side may leak over to the financing side, and vice versa.



Depth of experience is especially important in this sector, as efficient operations is key. The quick pace of routine deal flow makes a strong management team vital.

“IMBs want to know that they’re dealing with a team that knows what they’re talking about and understands their business,” said Patti Robins, who manages Mortgage Warehouse Lending at Sterling. “It’s also important because there has to be a strong understanding of the credit profile of the IMB and the collateral that’s being originated so as not to cause fire drills if hiccups occur.”



An efficient, well organized back office is important. The IMB’s customer experience is reliant partially on how efficiently the warehouse lenders funds to a closing. Furthermore, an inefficient warehouse lending platform likely results in unnecessary aging fees and extra IMB personnel time, the cost of which IMB management may not be aware. The speed and volume of routine deal flow can be high, so IMBs should place a premium on a streamlined and efficient warehouse lending platform. The mortgage warehouse lender’s back office should be responsive and service-oriented.

“The MWL team at Sterling has a unique structure in that Operations falls under the MWL umbrella. This is often not the case with our competitors, and I believe it is a big advantage to our customer base because it allows for better communication and efficiency,” said Robins.



Independent mortgage bankers should look for a warehouse lender with the ability to increase the lending facilities available as the IMB grows. This is essentially a matter of the lender’s size. Larger lenders have more flexibility—and, ideally, willingness—to make more funds available over time.

“As Sterling has grown over the years, Mortgage Warehouse Lending has been able to grow as well, which has been a big advantage to our client base,” said Robins. “Our line maximum has grown exponentially, and that has allowed us to support our clients’ success.”



Warehouse lenders need to stay abreast of product offerings in the industry and allow for warehouse eligibility when it makes sense. This means that eligibility should be considered if underwriting guidelines are sound and multiple investors are willing to buy a product.

“As a result of high competition given the current industry cycle, IMBs may be looking to expand their product offering to consumers. We are still in a market where over 90% of product is agency, so sublimits for expanded product may make sense, depending on a company’s overall business strategy,” said Robins.


To learn more about residential mortgage warehouse financing with Sterling National Bank, please contact Patricia Robins, Senior Vice President and Senior Managing Director, Warehouse Lending Group, at (212) 273-5880,




About the Author

Patricia Robins

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