Since 2011, the five largest U.S. banks have drastically reduced their mortgage originations. The five largest, Wells Fargo, JP Morgan Chase, Bank of America, U.S. Bancorp & Citigroup have reduced their approved mortgages by 50%. The withdrawal of the “BIG 5” from the mortgage business is a result of the fundamental shift in regulations that took place after the 2008 housing meltdown. Not only were new regulations implemented but new regulators like the CFPB (Consumer Financial Protection Bureau) were created to enforce the new stricter lending guidelines.
So how have they reduced their mortgage originations you ask? Well it’s not because most people stopped applying for loans at these institutions. In fact, mortgage applications increased at these intuitions over the same period. The reason why their mortgage originations fell is because they are NOT APPROVING as many applications as they once did. They are purposely declining applications to reduce their exposure to future litigation or governmental fines.
In fact, of the top 10 mortgage loan originators last year, 6 were non-banks. Non-banks do not have typical brick and mortar locations but offer the same type of mortgages as the “big banks”. They may also have lower rates and lower fees due to the fact that they do not have the overhead that brick and mortar banks have. These “non-banks” also called “wholesale lenders” are the banks of choice for mortgage professionals like us (mortgage brokers).
So, if you want to have a fighting chance in obtaining a mortgage, FORGET THE BIG BANKS. Give us a call at 718-226-5300
Mortgage Loan Originator
NMLS # 9216