The Wall Street Journal reported last week that both government controlled Fannie Mae and Freddie Mac are working on a program to support the extension of warehouse lending to small mortgage lenders.

A source familiar with the plan told HousingWire that:

a forthcoming program will “provide a certain measure of comfort” to warehouse lenders who provide lines of credit to smaller lenders to originate mortgages. The program will aim to encourage warehouse lenders to keep extending short-term credit to mortgage bankers by guaranteeing the GSEs’ purchase of loans made through their lines of credit.

Basically, if a mortgage bankers were to go out of business with loans sitting on a warehouse line, the GSE’s would still purchase the loans through a previous agreement with the warehouse lender said HousingWire.

What this means for the reverse mortgage industry is unclear but Torrey Larsen, President of Security One Lending told RMD that, “any guarantee by FNMA will spur additional liquidity in the warehouse lending business.”

He added that, “This fact not only means existing warehousing providers may increase the amount of lending it provides its clients, but, more importantly, should bring new entrants into this line of business.”

Fannie Mae continues to play an important role in the reverse mortgage industry and it’s growing portfolio is proof.  As of June 30, 2009 the GSE’s HECM portfolio reached record levels of $48.6 billion.

Despite the outrage many felt towards the GSE when it drastically raised margins, lenders still rely heavily on it as an investor for adjustable rate products and until there are more investors that won’t change.

So anything that will increase the amount of warehouse lenders, even if it’s just for Fannie Mae loans, is a good thing for the reverse mortgage industry.