According to the President of Ginnie Mae, non-depository lenders now make up 50% of the business of Ginnie Mae, according to a recent National Mortgage News article. The article indicates that big banks have withdrawn from mortgage lending and that non-depository lenders have filled the void that was created. Big banks have pulled back on mortgage lending as they are "getting clobbered" by buy-back requests from Fannie Mae and Freddie Mac and are being penalized by HUD and FHA. Big banks are getting hammered by the various government agencies and entities to a great extent, in my opinion, because of their greed-driven acquisitions of sub-prime lenders after the beginning of the Great Recession. Can't say that I really feel bad for them.
According to Tozer and National Mortgage News, all the big banks have lost notable market shares over the past four years. In addition to an increase in
business with Ginnie Mae, non-depository mortgage lenders have an increased share of business with Fannie Mae and Freddie Mac. While Fannie and Freddie insure mortgage loans, Ginnie Mae guarantees mortgage payments on MBSs that involve loans primarily insured by FHA and VA.
A Fannie official indicated that his entity will provide more support with tools and policies to encourage the trend of expanding business for non-depository banks. This growth by non-depository banks is in spite of remarks earlier this year by FHFA indicating that the lack of regulation and lack of capital make the non-depository banks a greater risk.
I know from just the volume of junk mail that we get at home that the big banks are still beating the bushes for mortgage business. Ads on television would also indicate that they are still in the mortgage business. I think their impersonal service and lack of flexibility might be reasons that they have lost market share to some extent. As Joe Petrowsky implied in a recent post, you are going to get more personal, experienced, and dedicated service from small independent mortgage lenders and brokers than from a big box bank.
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