UNITED STATES: ‘ Mortgage Servicers Creating Next Sub-Prime Crisis as They Side-Step New Banking Regulations Evolving into Lenders’

Ace Finance & Markets News

#AceFinanceNews – UNITED STATES – July 30- Mortgage servicers in the United States are evolving into the next big lenders reported Reuters, as they are sidestepping regulatory scrutiny to win business in a gap left by the retreat of big banks from the home-loan market.

By writing new mortgages, non-bank servicers such as Ocwen Financial Corp (OCN.N) and Walter Investment Management Corp (WAC.N) have grabbed the opportunity to supply less creditworthy borrowers with funding no longer available from banks.

The trend, investors and analysts say, could spark a revival in the shares of non-bank servicers by relieving the pressure that has accompanied regulators’ questions over how well these companies are treating struggling borrowers.

But, as they compete for limited business, the temptation to offer ever-riskier loans raises the spector of another sub-prime crisis.

Reuters Money

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