New mortgage business tumbled to the lowest level in more than a decade at Wells Fargo & Co. A decline in junior lien holdings more than offset an increase in first mortgage assets.
In its first-quarter 2014 earnings report, the San Francisco-based company said mortgage originations were $36 billion in the three months ended March 31.
Business sank compared to the fourth quarter of last year, when residential loan production came in at $50 billion.
Originations have plummeted from the same three-month period during 2013, when mortgage originations were $109 billion.
In fact, mortgage production has never been this low during any quarter since Mortgage Daily began tracking Wells Fargo’s originations in 2003.
It’s not clear whether Wells Fargo’s production will move higher or lower during the second quarter; first-quarter applications fell to $60 billion from $65 billion in the fourth-quarter 2013, but the application pipeline increased to $27 billion from $25 billion.
The retail origination channel generated $20 billion of first-quarter volume, while $16 billion came from the correspondent channel.
Refinances accounted for 34 percent of the latest activity, a little higher than the 32 percent share in the fourth quarter. During the same period, loans closed through the Home Affordable Refinance Program accounted for 7 percent of business, up from the fourth-quarter share of 6 percent.
Wells Fargo reported a managed servicing portfolio of $1.812 trillion. The total was off from $1.829 trillion at the end of the fourth quarter and $1.860 trillion at the end of the first-quarter 2013.
The serviced-for-others portion of the portfolio was trimmed to $1.470 trillion from $1.485 trillion at the end of 2013.
The investment portfolio of first mortgages was $259.478 billion, increasing from $258.497 billion at the end of 2013 and $252.307 billion as of the same date last year.
In addition, another $63.965 billion in junior liens were on the balance sheet, off from $65.914 billion three months earlier and down from $72.543 billion a year earlier.
Mortgage delinquency, including foreclosures, was 5.56 percent as of the end of last month. That was 84 BPS better than at the end of 2013 and 98 BPS better than at the same point last year.
Wells Fargo said its nonconforming mortgage holdings increased by $7.2 billion between March 31, 2013, and last month.
The commercial mortgage servicing portfolio increased, however, to 539 billion from $533 billion and was also up from $524 billion at the same point last year.
Included in the commercial mortgage servicing portfolio was $424 billion in third-party servicing, up from $419 billion three months prior.
Commercial real estate loans owned by the bank crept up to $107.969 billion from $107.100 billion and were $106.119 billion a year earlier.
Another $16.615 billion in CRE construction loans were on the books, barely changed from $16.747 billion at the end of 2013. As of March 31 of last year, CREÂ construction holdings were $16.650 billion.
The bank-holding company finished last month with $0.799 billion in repurchase liability, slashing its liability from $2.317 billion 12 months earlier. In addition, another $0.305 billion in repurchase demands remained unresolved.
Mortgage banking income was $1.510 billion during the most recent period, off from $1.570 billion in the fourth quarter and sinking from $2.794 billion in the first three months of last year.
Company-wide income before taxes was $8.352 billion, climbing from $8.217 billion three months earlier and $7.640 billion a year earlier.
After-tax first-quarter earnings were $5.9 billion — an all-time high.
Wells Fargo said it reduced mortgage production staffing by 1,100 full-time employees in the first quarter.
Across all businesses, headcount was 265,300, up slightly from 264,900 at the end of the fourth quarter.
