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New CSBS Paper: Mortgage Industry Overview

In a new policy paper, CSBS provides an overview of how the residential mortgage industry operates and is supervised by financial regulators. The paper, "Overview of Nonbank Mortgage," is the latest in a series on reengineering nonbank supervision being developed by CSBS to examine the nonbank financial services industry and how it is supervised. State financial regulators are the primary regulators of most nonbank financial services companies operating in the United States.

Key findings from "Overview of Nonbank Mortgage" include:

  • Since the financial crisis, U.S. residential mortgage debt outstanding has remained stable, hovering around $10 trillion, while home equity has swung back into positive territory at roughly $16 trillion 
  • The current mortgage market relies almost exclusively on backing from the federal government, with funding and guarantees from federally-supported entities (Fannie Mae, Freddie Mac and Ginnie Mae/FHA/VA) accountable for almost all new home loans
  • With roughly two-thirds market share, nonbank financial services companies are now the primary source of mortgage originations, a departure from prior eras in housing finance, and they represent a growing source of mortgage servicing as well
  • Compared to depositories, nonbanks present different kinds of risk to financial regulators such as, but not limited to, greater dependence on third parties for mortgage liquidity, lower operating capital, and lack of asset diversification 
  • State financial regulators oversee the mortgage industry through their statutory powers to license and supervise mortgage companies and, where necessary, take enforcement actions against bad actors 

You can read the latest paper here. Prior papers -- "Introduction to the Nonbank Industry" and "An Overview of State Nonbank Supervision" -- can be found here

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