Yellen urges action to curb US mortgage market risks [Video]

US Treasury Secretary Janet Yellen flagged risks posed in the mortgage market Friday, as regulators released recommendations to address the sector’s vulnerabilities.

“The vulnerabilities of nonbank mortgage companies can amplify shocks in the mortgage market and undermine financial stability,” said Yellen at an open session of a Financial Stability Oversight Council (FSOC) meeting.

She added that the council has laid this out in detail for the first time.

Nonbank financial companies do not have a full banking license but can offer various banking services.

On Friday, Yellen said further action is needed to promote sound operations and address liquidity and other risks.

Nonbanks originate and service most of US residential mortgages, a share that has risen since the 2008 financial crisis, according to Yellen who chairs the FSOC.

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