Capital One shuts down mortgage lending
Competition from nonbanks has forced Capital One to pull the plug on new mortgage and home equity loans.
Banking and financial services firm Capital One is exiting the competitively-charged home equity business.
“We have made the difficult decision to exit originations in mortgage and home equity,” a Capital One Financial Corp. spokesperson said Wednesday. “However, we will continue to service our current home loans portfolio.”
Traditional banks have lost their vast advantage in home lending to nonbank companies, many of which didn’t even exist a decade ago. For the first time, the majority of the nation’s top 10 mortgage lenders aren’t banks.
“Home lending is a complex and highly competitive business. It is a crowded field with multiple players, and borrowers have a broad range of options,” the Capital One spokesperson added.
“Given the challenging rate environment in this space, we are structurally disadvantaged, and we are not in a position to be both competitive and profitable.”
Following its home loan exit, Capital One plans to refocus attention on its more successful financial products, including credit cards, auto loans, and checking and savings accounts.
However, the company is not abandoning all mortgage-related activities. It will continue to provide specialized multifamily financing to the real estate development and investment community, including customized national agency finance solutions through Fannie Mae, Freddie Mac and FHA. Its lending activities for affordable housing supporting the low- and moderate-income markets will also be continued.
The brunt of the closure to Capital One’s mortgage lending will fall on the company’s 950 associates who work in offices and call centers located in the cities of Plano, Texas, St. Cloud, Minnesota and Melville, New York.
To learn more about the fierce competition among bank and nonbank home loan providers, check out our comprehensive mortgage guide and compare home loans to find one that best fits your circumstances. An abundance of options makes home loan refinancing a hot topic presently, especially among millennials.
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