HOUSINGNEWS REPORT
FEATURED ARTICLE
intermediaries by the Federal Reserve since September 2008 are simply sitting idle in banks’ reserve accounts. Banks in the United States currently hold $2.3 trillion in excess reserves at one of the 12 regional Federal Reserve Banks, over and above what depository institutions are legally required to hold to back their checkable deposits, according to Federal Reserve research . “The Fed pays the banks an interest rate of 0.5 percent,” said Miller, referring to excess reserves held at the Federal
of $11 trillion, according to the Federal Reserve . That’s nearly 50 percent of the outstanding mortgage risk. Since 2006, federally insured loan origination has been steadily increasing. Loans insured by the FHA has grown from 3.4 percent of all loans originated in the first quarter of 2006, to 17.5 percent of all loans in the second quarter of 2016, according to ATTOM Data Solutions. In the first quarter of 2006, the FHA insured 79,705 loans compared with 273,356 loans in the second quarter of 2016. Over the last 10 years, loans insured by the Veteran Administration (VA) has mushroomed, growing from 0.7 percent of all loans originated in the first quarter of 2006, to 8.7 percent of all loans in the second quarter of 2016, reports ATTOM Data Solutions . Mortgage Industry Nationalized One of the nation’s leading banking experts, Richard X. Bove, vice president of equity research at Rafferty Capital Markets , said the U.S. mortgage industry has effectively been “nationalized” by the federal government. “The mortgage industry is totally reliant on the U.S. government — and Congress refuses to act,” said Bove, author of Guardians of Prosperity: Why America Needs Big Banks. “The government is buying and insuring 60 to 70 percent
Reserve. “The banks have $2.3 trillion in the Fed’s excess reserves. They are holding this money off the market.” Comrade Capitalism Increasingly, the federal government — FHA, VA, Fannie Mae, Freddie Mac and Ginnie Mae — has played a larger role in the mortgage financing industry as the large depository banks retreat from the home loan market. In all, these five entities own or have guaranteed more than $5 trillion in mortgage risk out of a residential mortgage market
The banks have $2.3 trillion in the Fed’s excess reserves. They are holding this money off the market.” Peter G. Miller | Real estate columnist and author
NONBANKS DOMINATE LOW DOWN PAYMENT LOAN SHARE Nonbanks Dominate Low Down Payment Loan Share FHA Share of Q2 2016 Purchase OriginaNons VA Share of Q2 2016 Purchase OriginaNons FHA Share of Q2 2016 Purchase Originations VA Share of Q2 2016 Purchase Originations
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Wells Fargo Bank Wells Fargo
Quicken Loans
Quicken Loans
Caliber Home Loans Caliber Home Loans
Bank of America
Bank of America
of all mortgages. The government owns the mortgage market. It’s a nationalized market.”
Fairway Independent Mortgage Fairway Independent Mortgage
JP Morgan Chase Bank J.P. Morgan Chase
ATTOM Data Solutions • P5
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