“For consumers, it doesn’t really matter whether you get your loan through a bank or a non-bank, although in some ways non-banks are a little more nimble and can offer more loan products,” says Paul Noring, a managing director of the financial-risk-management practice of Navigant Consulting in Washington. “The impact is bigger on the housing market overall, because without the non-banks we would be even further behind where we should be in terms of the number of transactions.”

The Washington Post

Some borrowers have indicated that the mortgage rate and loan terms are crucial in deciding their lender.

Since 2011, the share of loans provided by the three largest banks in the U.S. dropped nearly 30 percent. Mortgage lenders like Quicken Loans and PennyMac Financial now hold six of the Top 10 market share spots.

“I believe that regulation has played some part in the shift from bank to non-bank lending, particularly due to the flight banks have made away from FHA lending,” said Pat Lamb, president of Homeowners Financial Group headquartered in Scottsdale. “The size and uncertainty of liability for improper activities has scared many of the large banks across the country, and the elimination of those programs has certainly moved business towards the non-bank lenders.”

Has the value proposition banks offer consumers in a home mortgage somehow diminished?

“As a non-bank lender,” Lamb continued, “we view the components of our value to consumers as a combination of service, product, and price. Banks have also historically offered the best mortgage rates because they were seeking more and more cross-selling opportunities. As we saw in 2016, many consumers were really being taken advantage of when they were sold on the fact that having all of their financial products with one bank had great advantages.”

Wells Fargo said its board fired four managers the bank says were involved in the consumer cross-selling banking scandal…(including the) regional president in Arizona.

San Francisco Business Times

With cross-selling under scrutiny and large banks ceasing incentives, has that helped non-bank lenders?

“While there is still an area in the jumbo portfolio business where banks use their cost-of-funds and private banking business to gain an advantage over non-banks,” said Lamb, “the playing field has absolutely shifted in favor of non-banks.”

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