Government agency says more staff needed to deal with nonbank lenders

by Ryan Smith30 Apr 2015
A government mortgage agency says it needs to add staff to oversee the growing number of nonbank lenders stepping up to fill the gap as big banks back away from riskier home loans.

Ginnie Mae is asking for more resources to police the rising tide of nonbank lenders making Federal Housing Administration-insured loans, according to a Wall Street Journal report. Over the last year, big banks like Bank of America and Wells Fargo have backed away from FHA loans after getting hit with multimillion-dollar settlements over allegedly defrauding the government by submitting ineligible loans for FHA insurance.

That void has allowed nonbanks like loanDepot and Guild Mortgage Co. to move in, according to the Journal. Ginnie Mae, which backs mortgage securities for FHA-insured loans, believes nonbanks will account for about 60% of its business this year. In 2011, nonbanks accounted for less than a fifth of that business, the Journal reported.

Nonbanks are overseen by state regulators and federal agencies like the Consumer Financial Protection Bureau, but they aren’t scrutinized as heavily by regulators like the FDIC and the Comptroller of the Currency.

“There’s just not all these other agencies looking at them that we have with banks,” Ginnie Mae President Ted Tozer told the Journal.

Tozer worries that nonbank lenders might face liquidity problems, the Journal reported. In the last year, Ginnie Mae has had to dedicate staff to advising nonbanks on how to create liquidity. Now, Tozer says, he needs extra staff to handle the work. Otherwise Ginnie Mae could have to increase servicers’ cash reserve requirements – which could increase borrowers’ costs by more than 0.1% point, Tozer told the Journal.


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