US Treasury's Yellen says Congress should act on nonbank mortgage sector
- U.S. Treasury Secretary Janet Yellen on Friday called for Congress to give regulators more power to oversee the growing nonbank mortgage industry, which she said presented unique risks to financial stability.
The council, whose members head other top financial regulators, voted unanimously to approve publishing a report and related recommendations on the issue.Regulators are moving to cover what they say is a gap in their power to address risk in what is now a large and growing majority of the mortgage market.
"We need further action to promote safe and sound operations, address liquidity risks, and promote continuity of servicing operations when a servicer cannot perform its critical functions."While they offer some advantages over traditional lenders, nonbanks also present unique challenges, according to Yellen.
The failures of nonbanks could harm borrowers and leave the federal government to take on servicing obligations, with larger disruptions in the sector possibly restricting mortgage lending, according to Yellen.
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