Consumers Turn to Non-Banks for Mortgages #homeownership #realestate #finances

Source:  Washington Post

More borrowers are choosing non-banks - financial institutions that only issue loans and do not offer savings or checking accounts - to get a mortgage.  It's a major shift in borrower behavior.  In 2011, 50 percent of all new mortgage loans originated from the three largest banks:  JPMorgan, Bank of America, and Wells Fargo.  However, in September 2016, that share plunged to 21 percent.

During that time, non-banks emerged as six of the 10 largest lenders by volume, including Quicken Loans, loanDepot, and PHH Mortgage.  In 2011, only two of the 10 largest lenders were non-banks.

Some traditional banks have backed away from the mortgage business after financial regulations were put in place following the last housing crisis, says Meg Burns, managing director of Collingwood Group.  That has opened the market to non-banks.  "The regulatory atmosphere changed from a risk management regime to a zero-tolerance and 100 percent compliance regime,"  Burns says.  "Not only were new regulations implemented, but new regulators like the Consumer Financial Protection Bureau were created. At the same time, the CFPB and other agencies became more assertive in their enforcement practices."

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