The government must reduce its footprint in the residential mortgage market and stop competing with private mortgage lenders.

FORBES: FHA Will Cost Taxpayers $150 Billion

They also singled out Fannie Mae and Freddie Mac, the two government-sponsored enterprises that are central to the residential mortgage market.

FORBES: It Won't Just be the US Downgraded

Fidelity National is certainly sensitive to activity in the residential mortgage market, and as rates on mortgages have come back down from April through mid-May, interest rate sensitive stocks such as the home builders, mortgage lenders and REITs have all rallied.

FORBES: Magazine Article

The economists looked at a sample of mortgages in a huge data set that covers 60% of America's residential-mortgage market.

ECONOMIST: Modifying delinquent loans

Without residential and commercial mortgage loans marked to market, bank financials are works of fiction, just like Japanese banks' financials were in the early '90s.

FORBES: Tax & Finance

In March Citi said it was reducing residential assets in the U.S. mortgage market to 20.0% below 2007 levels.

FORBES: Citi Aims To Trim Fat

In March Citi said it was reducing residential mortgage assets in the U.S. mortgage market to 20% below 2007 levels.

FORBES: Citigroup's $400B Yardsale

Indeed, the Fed has spent those years buying up residential-mortgage backed securities in their attempt to take toxic assets out of the market and push down mortgage rates.

FORBES: Home Prices Growing As Fast As Before The Housing Collapse: Case-Shiller

The residential mortgage business, which includes ubiquitous TV advertiser ditech.com, expects to gain market share for the eighth year in a row this year.

FORBES

Among the numerous sectors of the market, only residential-property companies have lower valuations, reflecting the steep climb in mortgage rates in recent months and clear signs that housing sales have cooled.

ECONOMIST: Investment banking