Wednesday, February 03, 2016 1:08:32 PM
KBRA Director: ‘Top Four’ Banks Will Exit Residential Lending or ‘Down Size’
By Brandon Ivey
bivey@imfpubs.com
Over the next several years, thanks to excessive regulation and interest rate issues, the nation’s four largest commercial banks may exit the business of residential lending and servicing entirely, or at the very least, downsize their presence, according to a bold new prediction from Christopher Whalen, a senior managing director at Kroll Bond Rating Agency.
In a speech this week, Whalen – a Wall Street veteran who has been vocal on many mortgage issues – noted that the cost of servicing alone has increased “several fold” since 2008, further pressuring mortgage banking income at depositories.
“The combination of rising mortgage origination and servicing costs, and falling lending volumes, translates into modest risk adjusted returns, a fact which is convincing many banks large and small to exit the residential mortgage market entirely,” Whalen said.
The former Bear Stearns executive named just one of the four megabanks in his speech: Wells Fargo. Presumably, the others include JPMorgan Chase, Bank of America and Citigroup.
According to figures compiled by Inside Mortgage Finance, these institutions rank first, second, third and fifth among residential servicers. Their production rankings are somewhat different, with Wells and JPM ranking first and second, respectively.
VAYK Discloses Strategic Conversation on Potential Acquisition of $4 Million Home Service Business • VAYK • May 9, 2024 9:00 AM
Bantec's Howco Awarded $4.19 Million Dollar U.S. Department of Defense Contract • BANT • May 8, 2024 10:00 AM
Element79 Gold Corp Successfully Closes Maverick Springs Option Agreement • ELEM • May 8, 2024 9:05 AM
Kona Gold Beverages, Inc. Achieves April Revenues Exceeding $586,000 • KGKG • May 8, 2024 8:30 AM
Epazz plans to spin off Galaxy Batteries Inc. • EPAZ • May 8, 2024 7:05 AM
Moon Equity Holdings, Corp. Announces Acquisition of Wikolo, Inc. • MONI • May 7, 2024 9:48 AM