Regulatory oversight from the Consumer Financial Protection Bureau (CFPB) is making it more problematic for large banks to continue in the residential mortgage space (more regs, rules and paperwork). In addition, banks consolidated during the financial crisis to the point where they are so well-diversified that revenue stream from mortgages is not part of their headline strategy.
All of which results in the downwind of big banks in the residential mortgage space and the rise of the nonbank originators.
At the same time, credit scores for closed loans have been dropping.
Shrinking large bank originations and increasing nonbank shares of the residential mortgage market. Sounds bit like the last decade before the financial crisis. Let’s hope that the financial regulators are watching the credit quality and performance carefully for nonbank originators this time around.