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Big banks are fleeing the mortgage market

Justice League

Marketwatch:

When it comes to residential mortgages, big banks are waving the white flag.

Banks originated 74% of all mortgages in 2007, but their share fell to 52% in 2014, the most recent data available from the Mortgage Bankers Association. And it could go even lower.

But even at these levels, the big bank backtrack is reshaping a lending landscape that’s already undergone seismic shifts since the housing bubble burst.
While there’s widespread agreement that banks should have been reined in — and perhaps punished — after playing a major role in the housing bubble that helped tank the economy, the past few years have been tough for banks’ mortgage businesses.

They now face a regulatory environment so strict that many are afraid to lend, even to customers with the most pristine credit. They’re still paying up for misdeeds done during the bubble. There’s essentially no private bond market to…

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