Could big banks be exiting the mortgage space?

by 15 Feb 2016
Big banks are fleeing the mortgage market – and the exodus might not stop anytime soon.

Banks’ share of the residential mortgage market is steadily declining, according to a MarketWatch report. In 2007, banks originated 74% of all mortgages. But that share was down to 52% in 2014, the most recent time for which data was available, according to MarketWatch.

Big banks dealt with a lot of bad publicity – and reams of new regulation – in the wake of the financial crisis. They’re now facing a regulatory environment strict enough that many are hesitant to lend, even to customers with good credit, according to MarketWatch. To put it bluntly, residential mortgages just aren’t worth the trouble for many banks.

“We can’t make money in the business,” BankUnited CEO John Kanas told investors during a January earnings call. “We realized that this was the lowest-margin, most volatile business we had, and we decided we should exit.”

Last year, banks lent 28.6% of all mortgages among the top 10 originators, according to the MarketWatch report. That’s not much more than half their share in 2012. The nation’s largest lender, Wells Fargo, originated just $47 billion in mortgages in the fourth quarter of 2015 – about a third of its origination volume of $125 billion during the same period in 2012.

The continued decline of mortgage origination at big banks leads some analysts to predict that many banks will get out of the mortgage business altogether, MarketWatch reported. Chris Whalen, an analyst with Kroll Bond Rating Agency, said in a speech earlier this month that he expects the four largest commercial banks will either “downsize or exit entirely from the business of originating and servicing residential mortgages.”

“The fact is that the cost of capital and compliance has convinced many bankers that making home loans to American families is not worth the risk,” Whalen said.


  • by | 2/15/2016 2:31:23 PM

    A little scary that this is happening. But could be huge opportunity for those left standing.

  • by Sbharkness | 2/15/2016 3:46:33 PM

    Let em go! Wells Fargo, Bank of America, and a handful of the other mega-banks that truthfully need to be broken up by Congress and should of been in 2008 had the big banks not had their people in the key Congressional positions to save their behinds. America is angry with the mega-banks and rightfully so. They need to get just as angry with their Masters at the Federal Reserve that is nothing Federal and everything about controlling the United States and the world through other Central Banks buy inflating and deflating the economies. These Central Banks are owned by many of the same private individuals. If one digs far enough and deep enough behind the walls of secrecy created by corporations they will discovery that they recognize many of the names starting with an English family named Rothschild. Yes, American monetary policy is controlled by citizens of a foreign country. Other names would be Rockefeller, Morgan, Mellon, and all the old money names that have controlled us the little people for the past 200 years. Did you know that Rothschild's are not permitted to even marry outside their family? It had to be to a 1st or 2nd Cousin to keep the wealth and the power to control the wealth in a nice tight little inter related group of incestuous bastards

  • by Gramma | 2/17/2016 9:05:47 AM

    Actually the Rothschilds are from German Jews, not from England. And its should HAVE not should of.


Should CFPB have more supervision over credit agencies?