Non-banks surge in FHA and VA mortgage market

Many of the nation’s biggest sources of residential mortgage money are non-bank lenders, which now provide more than four in 10 home loans.

PennyMac, AmeriHome Mortgage and Stearns Lending rank among  the largest mortgage lenders in the nation, and none is a bank.

All three have headquarters in Southern California, the heart of the subprime mortgage lending industry. And all three are managed by executives who formerly worked for Countrywide Financial, a notorious company that extended tens of billions of dollars of risky loans and exacerbated the financial crisis of 2008.

Non-bank lenders dominate the origination of mortgages insured by the Federal Housing Administration (FHA) and by the Veterans Administration (VA) and extended to poor-credit buyers and first-time buyers.

Non-banks now have 64 percent of the market for FHA and VA loans, up from 18 percent in 2010.

An analysis by the Los Angeles Times shows that the incidence of delinquent mortgage borrowers is greater among non-banks than banks.

Kevin Stein, associate director of the California Reinvestment Coalition, told the Times “the idea that a lot of the folks who benefited during subprime are back in action calls for closer scrutiny.” [Los Angeles Times] — Mike Seemuth