3 See Financial Stability Oversight Council (2019), 2019 Annual Report (Washington: FSOC, December), p. 42, https://home.treasury.gov/system/files/261/FSOC2019AnnualReport.pdf. -5transition their originations from the warehouse lines to securitization. Warehouse lenders became concerned about their exposures to the nonbank companies and cut off their access to credit. As a result of this funding crunch and other factors, many lenders failed, including household names like New Century Financial Corporation.
The risk of events like this one repeating is probably more limited today because mortgage companies primarily originate mortgages that are securitized through the far more stable GSE or Ginnie Mae markets. Instead, the main liquidity concern today comes from mortgage servicing.