Nonbanks dominate FHA-backed mortgages

Housingwire:

Nonbank’s share of Federal Housing Administration-backed mortgages crossed $1 trillion for the first time in November 2016, according to an article in The Wall Street Journal by Annamaria Andriotis.

From the article:

Ginnie Mae head Ted Tozer, who is leaving his position Friday, has said nonbank lenders may lack the financial wherewithal to withstand future stress in housing. In the worst-case scenario, problems could saddle taxpayers with losses.

“This is the biggest shift in mortgage lending since the savings-and-loans debacle in the 1980s,” Tozer said in a recent interview with The Wall Street Journal. The biggest nonbank FHA lenders include companies such as Quicken Loans Inc., Freedom Mortgage Corp. and Guild Mortgage Co.

However, not everyone agrees with Tozer.

From the article:

Mortgage bankers say Tozer’s concerns, while well meaning, are overblown. “It would take a significant rise in delinquencies to get to the place he’s talking about,” said Pete Mills, senior vice president of residential policy and member engagement at the Mortgage Bankers Association.

Tozer’s “concerns are valid in general because banks do have deeper pockets than nonbanks,” said David Battany, executive vice president of capital markets at Guild Mortgage. But he added, “We view that we are adequately capitalized to make advances in high-default scenarios.”

Source: WSJ
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