A new study from staff at the Federal Reserve Bank of Philadelphia provides a strong case for greater fintech mortgage finance on grounds that it enhances credit availability. Although resulting risk both to borrowers and the housing-finance system is not addressed, the paper notes that most fintech loans are originated for the GSEs and thus are constrained by GSE automated underwriting. However, since fintech are found to focus on the higher-risk edge of the AU spectrum, concentrations could well emerge with problematic consequences under stress scenarios.
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