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Non-Banks Outpace Banks in Mortgage Lending
Tuesday, September 2, 2014 6:35 AM

In the first half of the year, lenders that aren't banks made almost a quarter of all mortgage loans, the highest level since at least the financial crisis, according to data on the top-30 mortgage originators from industry newsletter Inside Mortgage Finance.

Mortgage lending at big banks such as Wells Fargo & Co. and J.P. Morgan Chase reportedly has dropped more quickly than the rest of the industry in the wake of large mortgage-related legal settlements, new banking standards that require lenders to carry more capital, and increased scrutiny from regulators.

Quicken Loans Inc., the largest mortgage lender outside traditional banks, reportedly made $24.3 billion of loans in the first half, putting it on a par with Bank of America Corp. and ahead of Citigroup Inc., according to Inside Mortgage Finance.

Nonbank lenders' rise is good news for some consumers who otherwise might not be able to get a bank loan in the current environment. For banks, this marks a retreat from a business that used to be very profitable but has turned into a legal and financial headache since the crisis.

Mortgage lending has declined across the board, mostly because of a sharp drop in refinances this year. In the first half, lenders made $530 billion in mortgages, 53 percent less than the first half of 2013, according to Inside Mortgage Finance. Nonbank lenders haven't been immune. Quicken's mortgage loans for that period were down 51 percent from a year earlier.

But specialized mortgage providers are taking a larger piece of the pie. Nonbank lenders among the top-30 originators made 23 percent of all mortgage loans in the first six months of the year, up from 17 percent in the first half of 2013 and 11 percent in the same period in 2012.


(Source: The Wall Street Journal)