On February 16, 2026, Vice Chair for Supervision Michelle Bowman spoke at the American Bankers Association 2026 Conference for Community Bankers, where she talked about the significant migration of mortgage origination and servicing from banks to nonbanks and the regulatory factors that may be driving this shift. In her speech, Bowman highlighted a long-term contraction in bank participation in the mortgage market.
Michelle Bowman emphasized that banks’ share of mortgage originations has declined from roughly 60 percent in 2008 to 35 percent in 2023, with servicing balances have also dropped significantly. She raised concerns about whether the 2013 changes to how mortgage servicing rights (MSRs) are treated in terms of capital requirements might have caused banks to reduce their involvement in the market.
Bowman mentioned that while MSRs come with risks connected to their value and operations, regulators now have more experience and should consider if the capital requirements are really in line with the actual risks involved. She expressed openness to ideas that would allow banks to not have to deduct mortgage servicing assets from their capital and suggested making the capital requirements more sensitive to risk, potentially linking them to loan-to-value ratios instead of using a one-size-fits-all approach.
Bowman also noted consumer and financial stability concerns, referencing vulnerabilities identified by the Financial Stability Oversight Council in the nonbank servicing sector. She concluded that recalibrating capital rules could encourage renewed bank participation in mortgage lending and servicing while maintaining safety and soundness.
Read Bowman’s full speech here.