You’ve touched upon a very scary topic in this article – one that I’ve been keeping a close eye on. Traditionally, we’ve seen conflicting messages on Capitol Hill from bankers vs. brokers. It’s been assumed for years that the bankers are trying to “put the brokers out of business”.

But the fact that warehouse lines are drying up basically puts most bankers in the same position as their broker counterparts – they’re all TPO’s (third party originators) at a severe competitive disadvantage to depository banks.

Now, we have a chicken vs. egg problem. Certainly there’s not enough warehouse capacity to satisfy current demand. But isn’t demand temporarily inflated due to historically low rates and the refi boom we’re in the midst of? It would be fantastic to see more warehouse capacity to satisfy current demand. But when we return to a rate of normalcy in six months or so, what happens with this excess capacity? Can the industry expand and contract based on temporary buying cycles?

Certainly, the Wells Fargo’s and B of A’s are licking their chops at the thought of controlling the retail channel. Ultimately, TPO’s provide a valuable service to consumers and I really hope that we see capacity increase soon.

Your article is awesome because it attaches the numbers/metrics I’ve been wondering about.

Keep up the awesome work Trace.