The great mortgage origination correction of 2023 hasn’t resulted in a whole lot of company franchises changing hands. But there’s been a ton of MSR sales and some branch networks finding new owners.
Some industry stakeholders are portraying the proposed capital requirements on mortgage assets as an existential threat, one that might indirectly hurt independent nonbanks. But perhaps those fears are overblown.
The proposal would change risk weights for mortgages in bank portfolios based on LTV ratios. Close to 20% of mortgages not sold by banks in 2022 had LTV ratios for which higher capital requirements would apply.
Fannie and Freddie both shifted from a provision for losses in the first quarter to a benefit in the second. Almost all of that improvement took place in the enterprises’ single-family businesses.
A proposal floated by federal regulators seeks to base capital requirements for mortgages held in portfolio at big banks on loan-to-value ratios. Banks expressed grave concerns about the proposal.
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