Below is a great article about the changing dynamics in the mortgage industry where smaller companies are stealing market share from the big banks’. The biggest reason for this are the new capital rules and regulations that effect the largest financial institutions. They make it unattractive to originate loans and slowdown the process. Retained or purchased mortgages also tie up valuable capital so there is a significant opportunity cost to doing so. The smaller companies that are winning market share typically originate for other lenders or sell mortgages to institutions or asset managers. Obviously, Fannie Mae and Freddie Mac guaranteed mortgages are still a huge part of the industry and if the politicians are being serious about phasing these behemoths out, they should really think about what the mortgage market would look like without common 30-year mortgages and without the big banks’ being willing to retain large amounts of mortgages on their balance sheets due to capital constraints. These changing dynamics make for great opportunities for opportunistic entrepreneurs, but I suspect that you will see some very questionable loans getting done, as these firms are less impacted by regulations such as Dodd-Frank and aren’t in the public spotlight like the large banks’.