JPMorgan Chase has decided to close its warehouse lending division and is giving its non-bank customers just a few months to secure new lines.
Meanwhile, mortgage advisors close to the warehouse issue say at least one more warehouse provider, a large regional bank, is seriously considering exiting the warehouse arena.
Late on Feb. 24 a spokesman for JPM confirmed to National Mortgage News that the bank's warehouse business bought from Washington Mutual last Spring would be shuttered.
Eight non-banks currently have lines of credit with JPM. (WaMu was sold to JPM in the fall with government assistance.) One advisor who has been tracking the warehouse issue, said he is not sure how large a player JPM is in terms of commitments but added,
"This cannot help the industry." Earlier this year JPM began winding down its wholesale/broker division. Non-depository residential lenders that depend on warehouse credit are facing a funding crisis because so many banks and Wall Street firms have closed their warehouse divisions or scaled back credit.
According to National Mortgage News, there are about 10 banks or thrifts that are still active in warehouse lending compared to roughly 30 two years ago.