More information on a warehouse line of credit

Some sources state that using a warehouse line can make it easier to avoid disclosing their gross income. Also, this means that in certain circumstances, the end consumer of the loan is paying more than they might otherwise, since they are paying the mortgage broker's fees as well as paying off the loan. It can also be difficult to tell if the broker is independent or an agent for the original warehouse. This is not always true, however, and usually the broker is acting as the lender in a fair and capable manner.

The purchase price is given to the warehouse lender to pay for the advances, fees, and etc. The mortgage banker keeps the remainder of the proceeds from the sale. This cycle starts over on the next loan. A warehouse line of credit is a credit line used by mortgage bankers. It is a revolving line of credit in which a mortgage banker arranges for a loan from a warehouse lender, then the original note from the loan is kept by the warehouse lender, while the rest of the documents go to the mortgage banker, who then offers it for sale. When an investor purchases the loan, the warehouse lenders ship the original note to the investor.

Each individual funding is structured as a sale of loans, but the originating institution keeps all income less the agreed upon financing rate. Rates vary from prime + 0.50% to prime + 3%, dependent upon collateral. Advance rates vary dependent upon collateral, but can be as high as 97%. Servicing can be retained by the originator or sold with the loans. The majority of warehouse lines of credit can accommodate a broad range of potential mortgage collateral, including subprime and equity loans, residential or commercial, including specialty property types.

Why use a warehouse line of credit:

Permanent Funding: Unless the loans fail to comply with agreed upon criteria, the lender is not obligated to buy back loans-the line of credit provides permanent funding for the life of all loans in this program.

• Less Risk: No margin calls. Once the asset is funded, there is no additional mark-to-market and posting of collateral.

• Whether on or off-balance sheet, warehouse line of credit programs can fund an unlimited loan volume. This enables specialty warehouse lender to enlarge their portfolios for maximum interest income and eliminating the need to manage multiple sources of capital.

• Controlling funds: This system gives the mortgage banker more control over the process of drawing loan documents.

It can be as effective as a supplemental or primary funding source for an origination program. There are warehouse lines of credit that are non-recourse - no personal guarantees required.

Other information on a Warehouse line of credit by the MBSD Group.

MBSD Group warehouse lines of credit services

The MBSD Group actively manages its warehouse line requirements mortgage broker licensing to ensure sufficient production capability while minimizing the costs associated with additional line capacity for broker to banker operations. "We increased our warehouse line capacity to support our current and forecasted production requirements," The MBSD Group Chief Financial Officer. "The additional capacity enables us to meet the demands of our growing mortgage and home equity businesses." The warehouse lines of credit are available for borrowings for interim financing of first mortgage and home equity loans and are collateralized by the net branch operations and MBSD Group and home equity loans held-for-sale. The MBSD Group uses warehouse credit facilities to fund its mortgage and home equity loans prior to their sale to capital market loan purchasers, which typically occurs within 30 days of funding.

About The MBSD Group
The MBSD Group actual results may differ from the results described in the forward-looking statements. Factors that could cause actual results for secondary marketing include, but are not limited to, general conditions in the mortgage and auto industries, interest rate fluctuations, and the impact of competitive products. These and other risk factors are detailed in The MBSD Group's periodic filings with the Securities and Exchange Commission. The MBSD Group, offers correspondent lenders loans and debt management services online at www.mbsdgroup.com has reengineered the consumer loan process by offering a broad choice of products from many lenders for mortgages, home equity loans, and auto loans in a secure online environment, combined with comprehensive personal service from dedicated loan consultants.
This news release contains forward-looking statements based on current expectations that involve risks and uncertainties.