Deregulation Could Get Big Banks Back Into Mortgage Lending

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February 22, 2017

Nonbank lenders account for nearly half of all mortgage originations, up from just 10 percent in 2010. But, the heyday of Quicken, loanDepot, and Caliber Home Loans may be ending soon.

CNBC reports that if the Trump Administration changes regulation policies, big banks will be able to better compete in the mortgage market.

Nonbanks have been able to benefit from the Federal Housing Administration (FHA), which require only a 3.5 percent down payment. Big banks have since moved out of FHA loans. Larger banks are also held accountable for mistakes in loan underwriting, which has caused them to charge more for home loans.

The Trump administration has not put forward any specifics yet, but the banking sector is expecting changes in some of the more stringent rules put on mortgage lending following the financial crisis. If deregulation happens, nonbank lenders who were able to grow market share so easily will face tougher competition.

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