Unlike traditional banks, nonbank mortgage companies like Rocket Mortgage are heavily exposed to swings in the mortgage market, depend on funding that can dry up during times of stress and don’t have stable deposits to rely on as a safety net.
Despite the wonky term, nonbank mortgage companies have become vital players that make most home mortgages in the United States today.
As of 2022, nonbank mortgage companies originated about two-thirds of US mortgages and owned the servicing rights on 54% of mortgage balances, according to FSOC.
“Nonbank mortgage firms are thinly capitalized, which makes them vulnerable to failure if they lose financing or mortgage defaults spike,” said McCoy, a former mortgage regulator.
“Starting in early 2007, we saw a tsunami of nonbank mortgage firms fail precisely for these reasons.”
Persons:
Janet Yellen, FSOC, Cooper, ” FSOC, Ginnie Mae, Bob Broeksmit, Patricia McCoy, ”, McCoy
Organizations:
New, New York CNN, Rocket, Mortgage, Mortgage Bankers Association, ABA, Boston College Law School, “
Locations:
New York, United States