Basel Tweaks Sought to Bring Mortgage Lending Back Home to Banks
Vice Chair Bowman argues Basel capital rules have pushed banks out of mortgage origination and servicing due to MSR deductions and uniform risk weights; two proposed changes would remove the MSR deduction while keeping the 250% MSR risk weight and move to loan-to-value-based risk weights for residential mortgages, aiming to reignite bank participation, stabilize servicing, and preserve consumer choice and financial stability.