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Sterling Bancorp Joins the Mortgage Warehouse Lending Rejuvenation

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Sterling Bancorp (STL) launched a new mortgage warehouse-lending business to provide funding to banks from the close of a mortgage until it’s sold. The company brought in 20-year warehouse lending veteran Gary Timmerman as the senior vice president and managing director of the newly formed Sterling Warehouse Lending Group. The business will attempt to establish more mortgage-banking firms and will concentrate on warehouse facilities secured by Fannie Mae (FNM), Freddie Mac (FRE) and FHA loans. In February 2010, Fannie pledged a $1bn warehouse credit line to the mortgage warehouse operations of Guggenheim Partners. The lender First California Mortgage Company secured $50m in new warehouse funding through the program in April, enabling the lender to fund an extra 5,000 home loans in 2010 and more than triple production in 2009. Brian Lynch, president of Advantage Systems, which provides accounting and contract management tools for the mortgage industry told HousingWire the warehouse business has been hit hard during the economic downturn. According to the Warehouse Lending Project, a coalition of mortgage bankers, the number of active warehouse lenders declined from a 2005 peak of more than 115, to fewer than 30 in 2010. The total aggregate capacity of warehouse lending credit dropped to about $25bn, down nearly 90% from the level in 2007. “Those are most certainly industry-changing numbers,” Lynch said. Sterling CEO Louis Cappelli said the new warehouse operation is part of the company strategy to deploy capital from a recent common stock offering and grow its core business. "As the housing market has now begun to show signs of stabilizing, we see an opportunity to apply Sterling's capital, experience and market knowledge to fill this financing need and generate solid returns on our investment in the warehouse business. In keeping with our traditional disciplined and prudent approach, our focus will be on financing only the most qualified, experienced and successful mortgage banking firms," Cappelli said. Write to Jon Prior.

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