There’s no doubt that the banking industry has changed a lot in the past 10-20 years with the advance of technology, with so business done over the internet and through apps. These changes have greatly affected the mortgage industry.
If you go way back in time, there were a lot more small banks where there was a very personal relationship between the bankers and the customers. Then, the bigger banks took over and took out a lot of the personal connection. Now, you have technology continuing to evolve. Getting to know your local banker like in the old days almost seems like a fairy tale. You can get a mortgage and do all your banking activities online without ever meeting or talking to a human being!
Why Are Big Banks Doing Fewer Mortgages?
Wells Fargo and JPMorgan Chase are two of the biggest banks in the world and they account for a large market share when it comes to mortgage origination. However, both corporations have seen the number of mortgage originations go down this year. Wells Fargo’s 2019 first quarter mortgage lending was down 23% compared to 2018 and JPMorgan Chase’s was down 18%.
Why is this? It is because owning mortgages has become less profitable for these larger banks because of the strict regulations put in place after the mortgage market crashed in 2008.
“In the early 2000s, bad mortgage laws helped create the Great Recession of 2008,” said Jamie Dimon, CEO of JPMorgan Chase. “Today, bad mortgage rules are hindering the healthy growth of the U.S. economy. Because there are so many regulators involved in crafting the new rules, coupled with political intervention that isn’t always helpful, it is hard to achieve the much-needed mortgage reform. This has become a critical issue and one reason why banks have been moving away from significant parts of the mortgage business.”
The Growth of Non-Banks
Plenty of mortgage loans are still being done, though, so who is taking all this business if not the larger banks? Things have shifted to where non-banks are taking over the mortgage market. These may be larger lending institutions like Quicken Loans or local mortgage lenders like Transparent Mortgage. A non-bank does not hold deposits like a traditional bank does and they supply mortgages that are backed by Fannie Mae, Freddie Mac, the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA) or other government agencies.
When you deal directly with one of these larger non-bank lending institutions or one of the big banks themselves, you may still have little-to-no interaction with the people there. You may be assigned a loan origination representative, or you may do everything online or through an app like Rocket Mortgage. Some borrowers prefer this method while others still want a more human experience like what you get at Transparent Mortgage. We are real people here to help you with your mortgage needs, and we are proud to be a locally focused lender.
The Transparent Difference
We have partnerships with the big banks, government agencies and larger lending institutions that allow us to offer many different mortgage products. We can help you explore all your options and make the right decisions for your financial future as a homeowner. An app or algorithm can’t truly answer all your questions, understand your needs or protect your best interests. The team at Transparent Mortgage can and will. Call us today at (619) 701-3906 to learn more about our personalized mortgage services or to get started on your mortgage loan application.