By The Numbers - part the fifty third

Once again, it's looking a bit like deja-vu all over again. It's ancient history, but Blythe Masters sowed the seeds of the Great Recession (the CDS) in order for the 1% to get richer. These days, the microscope has mostly been on the peril of commercial real estate, you know the kind the Orange Jesus claims to be master of.

But, today we find another scam that could, in tandem with commercial real estate, generate another Great Recession: nonbank residential mortgages. Who knew? The financial pros, of course, who've done nothing, it appears, to rein in the scammers.

As of 2022, nonbank mortgage companies originated about two-thirds of US mortgages and owned the servicing rights on 54% of mortgage balances, according to FSOC. That's up significantly from 2008.

In fact, nonbank mortgage servicers hold the servicing rights on nearly $6.3 trillion in unpaid balances on agency-backed mortgages — representing 70% of the total.

Oops.

Reining in the crooks is a whack-a-mole exercise with an infinite loop. Just put them agin the wall and shoot the motherfuckers. Do that a few times, and the scammers' risk/reward analysis will flip. I hear Xi and his predecessors worldwide have used that technique successfully over the millennia. Mostly to benefit themselves rather than the citizenry at large, of course. It's not as if the dictator crowd give a rat's sphincter about the citizenry at large.

It's not as if it's not happened before. D'oh

"Nonbank mortgage firms are thinly capitalized, which makes them vulnerable to failure if they lose financing or mortgage defaults spike," said McCoy, a former mortgage regulator. "Starting in early 2007, we saw a tsunami of nonbank mortgage firms fail precisely for these reasons."

You've been warned.