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INVESTMENT PROPERTY PRESERVATION TECH
NON-BANK
MORTGAGE
INSTITUTIONS
AND REITs
As the role of non-bank lenders has shifted
in the past few years, regulators are considering
allowing further growth for these mortgage
institutions and real-estate investment trusts
(REIT), the Wall Street Journal reports.
"It's time to make the system reflect the
market that it serves," said Pete Mills, SVP of
Residential Policy at the Mortgage Bankers
Association, in the Wall Street Journal piece.
While some have questioned if nonbanks
like REITs should have access to taxpayer-
subsidized funding, according to John von
Seggern, President of the Council of Federal
Home Loan Banks, having big clients gives the
system the financial clout it needs to support
smaller banks.
"We have access to world-wide markets
because the big banks give us a lot of volume,"
he told the publication. "We're able to then take
that favorable funding that we get and we're
able to lend it to all of our members, big and
small, at the same rate."
Some suggest that REITs make up an
optimal backbone for the mortgage market,
leveraging less risk than before the financial
crisis and able to quickly raise and deploy
money when they see an opportunity.
"Real estate is protected from volatility by
factors like location, scarcity, and plot size,"
NuWire states. "But unlike tangible property,
which is expensive to buy and tough to sell,
REITs can be traded on many investing apps.
Because they come in single shares, even
low-budget investors can diversify their REIT
holdings."
According to the Journal, the proposed
expansion of home-loan banks and REITs
would run counter to the plan to privatize
Fannie Mae and Freddie Mac.
"While Fannie and Freddie buy mortgage
loans and package them into securities, the
Federal Home Loan Banks play a different
role in housing finance: channeling money
from global bond markets to thousands of
institutions across the U.S.," the Journal stated.
Journal
