Not sure what you mean by "dominate", but there's $13 trillion in mortgage debt outstanding as of Q4 2014, $5T of that is held by federal agencies, and $4.5T is held by financial institutions [1]. So it's actually a much bigger business than you imagine.

> How exactly anyone expects to make money ... and with low recovery percentages if the security needs to be seized is beyond me

which is probably why you're not a mortgage banker :).

[1] http://www.federalreserve.gov/econresdata/releases/mortoutst...