Northpointe Lending Ceases TPO Temporarily

TPO's are dead. Brokers are dead. When the likes of Chase stop funding loans for brokers, why would they want to buy loans from correspondents who had funded them for brokers? Everyone is trying to run as fast as they can from broker business. No surprise there. Working with no-net-worth brokers is as dumb as lenders giving 100% loans to borrowers who have no "skin in the game". Correspondents are currently doing somewhat better because many of them are banks which are viewed by the investors as having deeper pockets. Therefore non-bank correspondents are currently able to swim amongst the school of banks. Investors could easily decide to stop buying loans from non-bank correspondents, though. Nationwide (the insurance company-owned servicer out of Iowa) did that two months ago. And even if investors continue to buy loans from non-bank correspondents, the non-bank correspondents are currently having capacity problems with their warehouse lenders, who want to limit their total line size to 15-20 times net worth. That's woefully inadequate at a time when investors are taking 3-4 weeks to purchase loans. The correspondents can't turn their lines within each month.

It's creating an odd situation where some lenders are overwhelmed with business but still able to eventually close it all, while other lenders don't have the capacity to close all the business coming their way. Which is why if rates dropped to 4% as the Reatlors want, most borrowers would never get those rates. You can't put 20 pound of potatoes in a 5 pound sack.