Mortgage Regulation Failing Again---Lending Moving Into The Shadow Banking System

The non-banks’ growth has been breathtaking. At the end of 2016, such unaffiliated mortgage companies accounted for more than 40 percent of new conventional mortgages (those eligible for sale to government-controlled guarantors Fannie Mae and Freddie Mac), twice the share they accounted for just eight years earlier. They’re also responsible for a decline in credit standards: The average FICO score at origination stood at 730 at the end of 2017, down from 750 five years earlier. For loans guaranteed by the Federal Housing Administration -- an area where the non-banks’ share is greatest -- the average FICO score has fallen to 680.

 

 

https://www.bloomberg.com/view/articles/2018-02-23/mortgage-loans-the-market-is-moving-into-the-shadows

 

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