Banks no longer reign over the mortgage market as they accounted for less than half of the mortgage dollars extended to borrowers during the third quarter of 2016, the Wall Street Journal reported today. It represented the first quarter that banks, credit unions and other depository institutions have fallen below that threshold in more than 30 years, according to Inside Mortgage Finance. The shift reflects banks’ aversion to risk, especially in the mortgage market, in the wake of the housing meltdown and financial crisis. Banks also remain fearful of legal and regulatory threats that have cost them tens of billions of dollars in mortgage-related fines and settlements in recent years. Six of the top 10 mortgage lenders by origination volume were nonbanks as of September, up from four for all of 2015 and two in 2011. The three largest U.S. retail banks, JP Morgan Chase & Co., Bank of America Corp. and Wells Fargo & Co., accounted for about 50 percent of mortgage dollars extended in 2011 — a share that dropped to nearly 21 percent year to date through September.
