Why Wasn’t there a Nonbank Mortgage Servicer Liquidity Crisis?

In March 2020, in the early days of the COVID-19 pandemic, many were concerned about the liquidity of nonbank mortgage servicers. As it turned out, the vast majority of these servicers did not face a liquidity crisis. In this Commentary I detail the reasons why, including lower than expected take up rates of forbearance, the role played by mortgage origination income, and the actions taken by the government-sponsored enterprises, Ginnie Mae, and housing agencies.

Regressive Mortgage Credit Redistribution in the Post-Crisis Era

We document four secular trends about U.S. mortgage origination by traditional and FinTech lenders after the 2008-2009 financial crisis. First, since 2011, the overall number, size, and approval rate of small and medium-sized loans have been decreasing over time, relative to large loans. Second, the largest lenders redistribute their lending the most. Third, this loan-size redistribution of credit increases in the size of the lender. Fourth, the effects are stronger for mortgages further away from the conforming loan limit(s) in both directions. We argue that the supply of credit drives these secular trends, and we assess several potential economic mechanisms.

Fintech Lending and Mortgage Credit Access

Following the 2008 financial crisis, mortgage credit tightened and banks lost significant mortgage market share to nonbank lenders, including to fintech firms recently. Have fintech firms expanded credit access, or are their customers similar to those of traditional lenders? Unlike in small business and unsecured consumers lending, fintech mortgage lenders do not have the same incentives or flexibility to use alternative data for credit decisions because of stringent mortgage origination requirements. Fintech loans are broadly similar to those made by traditional lenders, despite innovations in the marketing and the application process. However, nonbanks market to consumers with weaker credit scores than do banks, and fintech lenders have greater market shares in areas with lower credit scores and higher mortgage denial rates.

Blockchain and mortgage lending process: A study of people, process, and technology involved

Blockchain technology is on the rise and considered to be a revolutionary technology. It has been applied to many domains including personal health records, regulatory investigation, and global supply chain. Applications that may potentially benefit from blockchain technology are those, which involve multiple parties across the different organization, each performing a subset of many steps needed to complete a given transaction and involve different technologies. In addition, security and trust is a major concern. Given this, a good candidate for blockchain technology is mortgage lending. The purpose of this paper is to prepare a model that identifies different elements that are needed when applying blockchain technology in the mortgage origination process. This paper uses a popular framework used in customer relationship management (CRM) that combines three constructs: People, Process and Technology to develop the intended model.