Risk management

Kenneth Mahon, the new CEO of Dime Community Bank, wants to reduce the 152-year-old institution's multifamily exposure by diversifying into other asset classes. But finding new business amid already fierce competition could be an immense challenge for Dime — and other community banks — in 2017.

From selling servicing rights along with the loans to issuing private-label securities, a host of strategies from the past could return to the market as a result of the new political climate and interest rate environment.

Opus Bank has completed a $509 million securitization of its multifamily loans through a Freddie Mac-sponsored "Q-deal" risk-transfer securitization.

Rising interest rates typically squelch demand for refinancing, leaving lenders to compete for homebuyers' business. But plain-vanilla purchase loans aren't the only saleable products in this rising-rate environment. Here are five other products likely to find demand.

Regulators have warned about the dangers of high commercial real estate concentrations despite bankers' assertions that they are managing risk better compared to the financial crisis. Still, CRE concerns could influence M&A and loan diversification in 2017.

Loans originated in the third quarter were among the highest in credit quality since 2000, according to CoreLogic.

A regulatory 2017 scorecard for Fannie Mae and Freddie Mac calls on the firms to transfer a significant portion of credit risk to third-party private investors on at least 90% of unpaid principal balance of newly acquired single-family mortgages.

The surge in mortgage rates since the November election is expected to offset the increase to lenders' short-term funding costs following the Federal Open Markets Committee's 25-basis-point increase to the federal funds rate.

Of the five banks that failed their living will tests earlier this year and were forced to resubmit plans, only Wells Fargo failed again, resulting in immediate regulatory action that will restrict its growth, including its ability to expand internationally and buy nonbank subsidiaries.

Many consumers without traditional credit scores have nearly identical risk profiles to those who can be assessed the conventional way, representing an untapped market, according to a report by VantageScore.