Private Money Lenders Take 53% of U.S. Mortgage Market

[Corey Dutton]

From the “Banking Weekly,” a Financial Times podcast from June 2nd, non-bank lenders in the U.S., also called private money lenders, are starting to dominate the U.S. mortgage market. For the first time in history, private money lenders have taken the majority of U.S. mortgage market, 53%, double from 2 years ago!

The big banks are slowly retreating from the U.S. mortgage scene because regulations have increased their cost of doing business substantially in recent years. Non-bank lenders, also called “shadow banks,” don’t have deposits like the big banks, so they regulated very differently than the banks. They are also smaller, more nimble institutions as compared with the banks which are anything but. It’s no surprise that the big banks are slowly retreating from the U.S. mortgage market. With all of the new regulations under Dodd Frank that they’ve been forced to comply with, their cost of doing the business of residential mortgages has skyrocketed. The small banks also cannot keep up with the new costs associated with doing mortgages. This is another reason we’ve seen such a wave of M & As in the banking industry in the past several years.

(Source: http://podcast.ft.com/p/2764)