[…] The Financial Stability Oversight Committee (FSOC) is encouraging state and federal regulators and Congress to do more to enhance the resilience of nonbank mortgage companies (NMCs). “We need further action to promote safe and sound operations, address liquidity risks, and enable continuity of servicing operations when a servicer fails,” Secretary of the Treasury Janet L. Yellen said. NMCs originate two-thirds of mortgages in the United States and own the servicing rights on 54% of mortgage balances, as of 2022. Those figures are up from 39% and 4%, respectively, in 2008. Among the strengths of NMCs are that they serve groups that have been historically underserved by the mortgage market, they originate mortgages more quickly than their competitors, and they have expanded into specialty default servicing. However, they also have vulnerabilities. These include exposure to mortgage-related assets, significant liquidity risk and vulnerabilities shared with other NMCs that could lead to stress across the entire sector. In its report, the FSOC recommends that state regulators enhance prudential requirements and that Congress provide the Federal Housing Finance Agency (FHFA) and Ginnie Mae with additional authorities to better manage these risks. It also recommends measures to address liquidity pressures in the event of stress and to ensure continuity of servicing operations. The FSOC added that it “will continue to monitor the evolution of the risks identified in the report and may take or recommend additional actions to mitigate such risks.Read Article” […]