With many major banks and lenders feeling the strains of increased regulatory actions implemented on them by the federal government stemming from the subprime mortgage crisis, a new report states community banks stand to benefit in terms of mortgage lending.
A report by FBR Capital Markets relays that "smaller players" - community banks - should reap the most benefits of regulations imposed against larger lenders.
"Given the cost to the large banks to service mortgages, we expect the smaller players to continue taking share," FBR Capital Markets' Paul Miller wrote in the report.
The only thing that may hold back some community banks and other small lenders from taking over a larger share of the mortgage lending market, according to the source, is a lack of capital or willingness to take on added risk in new loans.
Recent real estate data shows few banks - big or small - are loosening their lending standards, as many are still wary of giving out loans they deem risky. The Mortgage Bankers Association's mortgage application survey for the week ending December 16 fell nearly 3 percent from the week before.