Source: Housing Wire —
Some independent mortgage lenders feeling the brunt of increased lending rates are declaring bankruptcy and have already laid off hundreds of employees in certain instances, in what is being described as the worst shape the housing market has been in since the bubble burst in 2008.
Some lenders have already downsized or closed permanently, Bloomberg reported, such as First Guaranty Mortgage, a company majority owned by fixed-income giant Pacific Investment Management. After making loans this year that dropped in value, First Guaranty filed for bankruptcy in June, resulting in 471 of its more than 600 employees losing their jobs.
Referencing data from LendingPatterns.com, Bloomberg reported that non-bank lenders composed two-thirds of refinancing firms in 2021—up from about one-third in 2004. Banks’ market share has decreased from half to about a third since 2016, according to news and data provider Inside Mortgage Finance.
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