Banks' Credit Lines to Nonbank Mortgage Companies and Downstream Mortgage Originations

Alessandro Rebucci, Horacio Sapriza, Alex Sclip () and Daniel te Kaat
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Alex Sclip: https://www.dima.univr.it/?ent=persona&id=71738&lang=en

Richmond Fed Economic Brief, 2025, vol. 25, issue 38

Abstract: We study the downstream mortgage origination activity of banks with credit ties with nonbank mortgage companies (NMCs). We show that banks continued to compete with NMCs in the downstream mortgage origination market, despite financing competing NMCs. NMC activities remain tight to the originate-to-distribute business model, as most of the mortgages were delivered to government-sponsored enterprises, such as Fannie Mae. Their lower on-balance sheet exposure to the mortgage market reduced their interest rate risk exposure, which drove risk during the interest rate hiking period.

Keywords: housing; and; housing; finance (search for similar items in EconPapers)
Date: 2025
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