[Expert commentary] There appears to be a concerted, well-funded campaign out there spreading the myth that Congressional GSE reform is bad for small lenders. As a small-to-midsize lender myself, I promise you that this idea is false. In fact, the single biggest risk to small lenders is that Congress doesn’t act and the GSEs are allowed to recapitalize and are released from conservatorship without first being reformed.
In the wake of the financial crisis, nonbank lenders and servicers have witnessed a significant emergence in the mortgage business. In fact, independent mortgage banks are heavily dominating the single-family market. Yet misperceptions persist about the capacity of these IMBs and other nonbanks.
For anyone actively working in the mortgage industry, it’s no secret that reverse mortgages have taken a brutal hit in the last two years. The U.S. Department of Housing and Urban Development issued major program changes at the end of 2017 that effectively limited the amount of proceeds and the number of people who could qualify for the loan. The result had lenders across the space enduring sizable volume drops and subsequent gashes to their bottom lines.