Mortgage Finance
Unlike traditional banks, these specialized firms focus exclusively on the origination, funding, and servicing of residential and commercial real estate loans.
Why it exists
Mortgage finance exists to make housing affordable by spreading the cost of ownership across decades.
Why it’s necessary
Most households cannot buy homes outright. Long-term financing makes modern real estate markets viable at scale.
Key components
Loan origination
Securitization & loan sales
Servicing platforms
Credit underwriting and capital markets distribution
How to evaluate businesses
Origination volume, gain-on-sale margins, servicing portfolio size, prepayment risk, and default rates matter most. Interest rate sensitivity dominates valuation.
How the industry could be improved
Digitized underwriting, real-time income verification, dynamic loan pricing, and faster secondary market settlement to reduce friction and systemic lag.