This paper examines the rise of shadow banks, particularly fintech lenders, in the US residential mortgage market from 2007 to 2015. The authors explore two main forces driving this growth: regulatory differences and technological advantages. Using difference-in-difference tests, they find that traditional banks contracted in areas with higher regulatory burdens, while shadow banks, especially fintech lenders, expanded to fill these gaps. Fintech lenders offer higher-quality products and charge premium interest rates, using different information sources to set interest rates compared to non-fintech lenders. A quantitative model suggests that regulation accounts for about 60% of shadow bank growth, while technology accounts for about 30%. The paper also discusses the historical context of shadow banking, regulatory changes post-financial crisis, and the role of government-sponsored enterprises (GSEs) and FHA guarantees in supporting shadow banks. Overall, the findings highlight the complex interplay between regulatory and technological factors in shaping the evolution of the mortgage market.This paper examines the rise of shadow banks, particularly fintech lenders, in the US residential mortgage market from 2007 to 2015. The authors explore two main forces driving this growth: regulatory differences and technological advantages. Using difference-in-difference tests, they find that traditional banks contracted in areas with higher regulatory burdens, while shadow banks, especially fintech lenders, expanded to fill these gaps. Fintech lenders offer higher-quality products and charge premium interest rates, using different information sources to set interest rates compared to non-fintech lenders. A quantitative model suggests that regulation accounts for about 60% of shadow bank growth, while technology accounts for about 30%. The paper also discusses the historical context of shadow banking, regulatory changes post-financial crisis, and the role of government-sponsored enterprises (GSEs) and FHA guarantees in supporting shadow banks. Overall, the findings highlight the complex interplay between regulatory and technological factors in shaping the evolution of the mortgage market.