In a recent CNN Money article that reads like a press release from the banking industry, Donna Borak reported that a growing number of mortgages being financed by nonbank lenders means that danger is again lurking in the housing industry.
Borak led the article with a sub-headline that read, “Low interest rates. Easy credit. Poor regulation. Toxic mortgages,” referring to nonbank lending.
She also said that nonbank lenders are “subject to far less regulation and have fewer safeguards when borrower defaults start to pile up”.
It’s an antiquated take to say that nonbanks are riskier options for mortgages than banks. It’s actually easy to argue the opposite – that non-banks are not a risk, because they are specialists. They focus on mortgages, all day and every day. They build technology to make the mortgage process easier for consumers. Nonbanks have to comply with state regulatory requirements in all 50 states, in addition to following CFPB rules and Dodd-Frank laws.
For all those big banks that do 48 different things, mortgages are just one small segment of their overall product portfolios. Banks only have to follow federal laws (not state-level regulations), and bank loan originators aren’t even required to be licensed. But why don’t reporters talk about that?
Nonbanks – and all loan officers that work at nonbanks – have to be licensed in every state they originate loans in. They’re experts in their field. I could argue that mortgage brokers, specifically, are the best option – both from the perspective of consumers getting loans, as well as loan officers doing more business – because they have access to pricing, products and regulations at banks and non-banks to find the best deal for consumers.
No wonder why so many people, when they hear “CNN,” think “fake news.”
READ MORE: https://www.housingwire.com/blogs/1-rewired/post/42749-nonbank-mortgage-lenders-still-misunderstood-in-mainstream-media