Sabree Beneshour

When it comes to getting a mortgage, there are banks and non-banks that make loans.

Does it matter?

From American Public Media, this is Marketplace.

In Denver, I'm Amy Scott, in for Kai Risdahl.

It's Tuesday, February 17th.

Good to have you with us.

We're going to start with a different kind of Fed story than usual.

Typically, we talk about the central bank in terms of where interest rates might be headed.

But the Federal Reserve regulates banks, too.

And in a speech yesterday, a top Fed official said the central bank is rethinking some regulations affecting mortgages.

The changes would encourage banks to make more home loans.

And as Marketplace's Sabree Beneshor reports, that could make it easier for the rest of us to get mortgages.

After the 2008 crash, banks bolted out of the mortgage business.

Tomasz Piskorski is a professor of finance at Columbia Business School.

One reason was they got burned so bad by the home loans they made.

Another reason, according to Piskorski's research, was regulation drove them out.

Specifically, new rules said banks had to set aside a bunch of money in reserve as a kind of safety cushion should things go bad.

A lot of banks felt it was too much money, so they just didn't want to deal with it.

That's not necessarily a problem, he says, but it does mean banks aren't out there swimming in the sea of competition to give you a home loan.

And proposed Biden-era rules would have tightened those regulations even more.