Opinion: Bank Capital Requirements Would Put Squeeze on Mortgage Market

HousingWire, November 7, 2023–Laurie Goodman and Jim Parrott
In September, the nation’s banking regulators released a proposal to increase the capital required of banks with more than $100 billion in assets. The effort was intended to decrease systemic risk, but by focusing narrowly on the risk posed by banks, it would likely increase risk in the mortgage market.

The proposal would make it more expensive for large banks to hold, sell or service mortgages, reinforcing their now decade-long retreat from mortgage lending.

And yet, it would also undermine the institutions that will need to fill the vacuum, independent mortgage banks, by making it more expensive for banks to provide them financing or a market for their primary asset, mortgage-servicing rights.
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