May 18, 2016, Opinion Letters, The Wall Street Journal

Opinion Letters

Government Drives Banks From Mortgages

The chart accurately represents the pullback of traditional banks from the mortgage lending business.

I would like to clarify a point in a chart accompanying “Private Lending Fills Gap Left by Wary U.S. Banks” (page one, May 12). While the category of independent mortgage lenders does include some private lenders, it doesn’t include all of the private lenders mentioned in the article. It includes only those that have originated more than $10 million in mortgages or at least 100 mortgages in the preceding year.

By this definition, independent mortgage lenders have long been a staple of the mortgage market, working within their communities to offer sustainable mortgage credit to qualified borrowers. They are strictly regulated by state and federal agencies and must meet rigorous operating and capital standards from the counterparties they do business with—often other banks, investors, Fannie Mae, Freddie Mac and even government entities like the Federal Housing Administration.

What the chart does accurately represent is the pullback of traditional banks from the mortgage lending business, primarily due to the federal government’s onerous and over-the-top enforcement regime that is extracting hundreds of millions of dollars in fines and settlements. Borrowers are fortunate to have well-capitalized and well-regulated independent mortgage banks ready to plug the gap.

  David H. Stevens

President and CEO

Mortgage Bankers Association

Washington