As Fortress and other nonbanks increase their stake in mortgage servicing, we here assess the impact of their growing role on mortgage securitization. We conclude that nonbanks are taking advantage of near-term regulatory-arbitrage opportunities resulting from increased stress on bank servicers that will diminish in tandem with the legacy book and – more importantly – matter a lot less as the combination of servicing reform and reduced securitization takes hold and banks go back to portfolio lending.
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