According to the Wall Street Journal, Fannie Mae and Freddie Mac are getting into the warehouse lending business.
OK, what is warehouse lending?
Some mortgage companies are “non-depositories” — they’re not banks that take deposits. Instead, these companies borrow money, short term, from other financial institutions. These short-term loans are revolving lines of credit , like giant credit cards. They are called warehouse lines of credit.
In the past two years, warehouse lending has died — most of these lenders have gone out of business. Accordingly, banks have consolidated and this has created a less competitive market. The BIG four (Bank of America, Chase, Wells Fargo, and Citi Bank are responsible for more than half of all home loans. These companies also place restrictions on customers who are also competitors!
With mortgage lending being consolidated into just a few companies, it’s inevitable that this “near monopoly” will boost rates and fees while customer service deteriorates. That’s why it’s great that Fannie and Freddie are getting into the warehouse lending business: The Big Four will have stronger competition.
For more Information on the Riverside real estate and San Diego real estate market, please feel free to contact me.
Joey Dodge
Broker-Owner
San Diego Real Estate
San Diego County – 760-670-8353
Riverside County – 951-966-1389