But they were able to obtain waivers from their lenders and maintain the lines, given the overall strength of the economy.
That won’t be so easy though if the outlook is more uncertain, Kornfeld said.
The “risk is that many of these nonbank lenders will not be able to continue lending in difficult economic times,” JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said in the bank’s 2018 annual report.
Kornfeld doubted that conventional banks would rush to fill the void if the non-depository lenders exited the mortgage market.
“The banks will be cautious about stepping back in,” he said. “That will have an overall ripple effect on the economy.”
Liquidity Squeeze
Mortgage Bankers Association chief economist Michael Fratantoni played down the danger of an economically-damaging liquidity squeeze.
“We think it’s something that can be managed,” he said.
He characterized the chance of thousands of mortgage lenders being hit equally by the same financial shock as “very small.”
Quicken Loans Chief Executive Officer Jay Farner said the focus should be on an institution’s capital and its ability to withstand fluctuations in the economy, rather than on whether it’s a bank or nonbank.
“We’re better capitalized than 93, 94% of the FDIC- insured institutions,” he said.