The mortgage servicing landscape is undergoing a notable transformation, with non-bank lenders steadily increasing their influence and market share. Recent data highlights a significant shift in new issuance and prepayment volumes within the agency mortgage sector. This trend underscores a broader repositioning of market power away from traditional banking institutions towards agile non-bank entities, reshaping the dynamics of mortgage finance.
Nonbank's Growing Dominance in Agency Servicing
In the first half of 2025, the agency mortgage servicing market experienced a substantial slowdown, with new issuances dropping to $555 billion from $1.1 trillion in the previous year. Similarly, prepayments saw a decline to $301 billion from $546 billion in the same period. This reduction is largely attributed to a less active origination environment. Despite these shifts, the overall unpaid principal balance (UPB) has remained remarkably consistent, standing at $8.964 trillion in July 2025, closely matching the $8.951 trillion recorded a year prior.
A deeper dive into the market reveals that nonbank lenders have significantly expanded their footprint, asserting a commanding position over banks in agency servicing and originations, especially concerning Ginnie Mae loans. Nonbanks now account for an impressive 72% of the total UPB across all agency servicing, with banks holding the remaining 28%. Their dominance is even more pronounced within Ginnie Mae pools, where nonbanks manage nearly 89% of the share. This ascendancy is also evident in new issuances for the first half of the year, with nonbanks contributing $481 billion compared to $74 billion from banks, and handling a larger volume of prepayments at $235 billion against the banks' $65 billion. This sustained growth confirms the nonbank sector's pivotal role and increasing influence in the evolving mortgage market.
Key Players and Market Trends
Among the top mortgage servicers as of July, nonbank entities continue to lead the charge. Lakeview Loan Servicing holds the top spot with $738 billion in UPB, closely followed by Mr. Cooper at $673 billion and Pennymac at $659 billion. An analysis of the top 25 servicers shows a clear trend: eight are banks, while 17 are nonbanks, signaling a persistent retreat of traditional banks from the mortgage business. This shift is not without its challenges; certain nonbank servicers also report higher delinquency rates. Lakeview, for instance, recorded an 18% delinquency rate, with Freedom Mortgage at 15.5% and Pennymac at 10.8%.
Furthermore, in the realm of mortgage sellers, nonbanks are equally prominent. United Wholesale Mortgage (UWM) captured the largest share of production in the first half of the year, accounting for 11.9% with $66.2 billion. Pennymac followed with $61.6 billion, and Rocket Mortgage with $39.5 billion. These top three sellers, all nonbanks, collectively represent approximately 30% of all agency production. The sustained performance and expanding market share of these nonbank leaders underscore their strategic importance and growing influence within the mortgage industry, continuing to redefine its competitive landscape.
