The central bank will soon introduce a slate of regulatory proposals aimed at encouraging banks to get back into the mortgage game in a big way(!), according to Fed Vice Chair for Supervision Michelle Bowman.

Bowman on Monday said the Fed is looking to tweak the Basel capital framework that depository banks have long argued has made residential mortgage lending far too risky & costly relative to other businesses.

The Fed’s numbers back this up, too: In ‘23, banks originated just 35% of mortgages & serviced 45%. In ‘08, banks originated 60% of mortgages & serviced 95% of loans.

Here’s what the Fed is cooking up 👇.

(🙏 If you like what you’re reading, tell a fellow mortgage junkie to sign up here.)

The Fed is weighing a plan to remove the rule that banks must deduct MSR assets from regulatory capital while maintaining a 250% risk weight for those assets. What the appropriate risk weight level should be remains the central question, but this potential change is something the MBA has been arguing in favor of for years.

"This change in the treatment of mortgage servicing assets would encourage bank participation in the mortgage servicing business while recognizing uncertainty regarding the value of these assets over the economic cycle," Bowman said.

Capital rules impose the same risk weight regardless of the LTV, even though default probability & severity of losses vary substantially w/ LTV, Bowman said. The Fed will publish a proposal to make capital requirements better reflect the actual risk for the bank, including using LTVs to determine the risk weights.

"This change could better align capital requirements with actual risk, support on-balance-sheet lending by banks, and potentially reverse the trend of migration of mortgage activity to nonbanks over the past 15 years," Bowman said.

The impact on these proposed changes “would be huge,” one veteran bank leader said. “It would make it significantly more attractive for regulated institutions to invest & hold MSRs.”

Recall that we reported last week that Wells Fargo is selling a roughly $40B UPB MSR package to a nonbank lender/servicer. Wells Fargo CEO Charlie Scharf has repeatedly said that Wells’ current mortgage strategy is aimed at reducing risks & shrinking the servicing portfolio. In December, he called home lending returns “subpar.”

One of Movement Mortgage’s top producers has exited. Kim Winters, who ran the Asheville, NC branch & has notched about $165M in volume over the past 14 months, left last week w/ her 16-person team to run a dba at CMG. 

Winters is now leading Dwello Mortgage Advisors at CMG Home Loans (not to be confused w/ Dwello Mortgages, “Shropshire, England’s leading mortgage brokerage”).

The Scoop hears another big Movement producer is expected to exit this week. Movement has been hit w/ several notable departures in recent quarters, including COO Jason Stenger (Rate) & LOs Nicole Rueth ($115M to CCM), Sara Elkington ($58M to Evergreen Moneysource), James Murphy & Jill Webster Bartoletti ($96M to Synergy One).

RETR figures show that Movement has gained $1.31B in arriving LO production over the last year, but lost $5.04B in production during the same time period, a 16% drop y-o-y.

Despite the production losses, executives have told staffers they’re in a good place & have built considerable momentum. The company had a profitable ‘25, funded north of $20B in loans & the LOS switch to Blue Sage (called MOR LOS) has reduced processing times by 6 days on average, COO Lyra Waggoner recently wrote in an email to staff. 

Waggoner also told staff that the number of Changemakers ($75M+ producers) in ‘25 doubled to 53 from 26 in ‘24. She said that units and volume exceeded the prior year totals in Q4 & in January ‘26, which is a “clear sign that our focus on efficiency and leveraging technology is paying off across the organization.”

Movement executives declined to comment…

TransUnion brass said late last week that none of its customers have moved to the direct license program offered by FICO.

As you’ll recall, FICO announced the program in October, cutting out the credit reporting bureaus & selling directly to mortgage lenders. The new program, dubbed Mortgage Direct License, is essentially FICO saying, “We’re not going to let the bureaus—which collectively form VantageScore—add margin when they sell it to resellers, so we’ll keep prices where they are & go to Xactus, Cotality, Factual Data, etc. directly, and they’ll sell a tri-merge report to the lender.”

Seems like a bit of a shell game for customers if the bureaus in turn raise prices on Xactus, Cotality, Factual Data, but I digress.

TransUnion CEO Chris Cartwright said on a Thursday earnings call that the company won’t see an impact on earnings even if customers move to FICO’s direct license offering. “If the direct license program does get traction over the course of the year, that may erode some of our revenue, but it won’t erode any of our profits,” he said.

CFO Todd Cello told analysts that in ‘24 and ‘25, “We grew high single digits even when excluding FICO mortgage royalties & expect to deliver 6% growth based on the high end of 2026 guidance.”

Customers, meanwhile, will probably pay 40% or more in credit costs in ‘26…

(🙏 If you like what you’re reading, tell a fellow mortgage junkie to sign up here.)